Tata and ThyssenKrupp reach agreement on steel merger

The merger, which would lead to job losses at both companies, would create the second-largest steel group in Europe, after ArcelorMittal of Luxembourg.

Tata Steel, which operates Port Talbot Steelworks, the largest steel production plant in the UK, and ThyssenKrupp had been in negotiations since July 2016 after Tata announced it was ditching talks of selling off its British operations.

Both partners said the merger would lead to an approximate 4,000 person reduction in the size of its workforce, half of which coming from administrative positions and the other half being production roles, and would be shared evenly by the two firms.

ThyssenKrupp chief executive, Heinrich Hiesinger, said both companies would need to downsize in order to operate more efficiently due to increased pressure from import prices and overcapacity within the steel industry.

"We will not be putting any measures into effect in the joint venture that we would not have to adopt on our own," he said.

Roy Rickhuss, chair of the National Trade Union Steel Co-ordinating Committee, added, "The steel trade unions cautiously welcome this news and recognise the industrial logic of such a partnership."

"As always, the devil is in the detail and we are seeking further assurances on jobs, investment and future production across the UK operations."

Business Secretary Greg Clark said, "The government has been working hard with the unions to secure a sustainable future for Tata Steel in the UK, its 4,000 employees at the Port Talbot site and its supply chain."

The joint venture, formally announced on Wednesday, would be named ThyssenKrupp Tata Steel and would see roughly 21m tonnes of flat steel products shipped every year with an estimated turnover of €15bn a year.

"The strategic logic of the proposed joint venture in Europe is based on very strong fundamentals and I am confident that ThyssenKrupp Tata Steel will have a great future," said Tata Steel chairman Natarajan Chandrasekaran.

An agreement was expected to be signed in early 2018.

As of 0825 BST, ThyssenKrupp had moved ahead 5.29% to €26.52, with Tata Steel inching forward 0.61% to INR 680.55.