Tata Steel, Thyssenkrupp to merge their business

The Dollar Business Bureau 
 
India-based multinational steel company Tata Steel and Germany-based engineering conglomerate Thyssenkrupp have held several discussions about combining their continental European steel business, but didn’t reveal their present situation.

The two companies have been discussing the possibilities of collaborations for almost a year now.

With this agreement, Tata steel and Thyssenkrupp will probably be the second largest manufacturer of steel in Europe with their combined volume of 22 million tonnes, only behind Luxembourg-based Arcelor Mittal, which has almost doubled the capacity.

The joint venture will help the two companies cut capacity and support prices in the sector, which have been crushed by inactive demand and low-cost Chinese imports.

On Wednesday, Tata Steel had declared that it was interested in acquiring a share in ThyssenKrupp's European steel unit. The shares of the company were up around 7.7% in the early morning trading.

Tata steel had also announced that it would sell its UK steel business as demand for steel globally, especially in the European market, had been declining after the 2008 fiscal crisis, and it was not expecting any turn around in its UK steel business.

The company’s UK steel business has been faring bad due to various regional and international factors, including the global oversupply of steel, weak demand for the metal, high manufacturing cost and unstable currency.

“Under these adverse market conditions, the company has extended substantial financial support to the UK business and suffered asset impairment of more than $2 billion in the last five years,” the company had said in a statement.