Tata Steel may be considering breaking off talks over a planned merger of its European business with German conglomerate ThyssenKrupp, a UK media report claimed today.
The merger talks had been revealed by the Indian steel giant last year as part of a major restructuring of its UK steel business.
Such a deal with the German steel major could potentially lead to the formation of a European steel behemoth with blast furnaces in Wales, the Netherlands, and Germany. However, ‘The Sunday Times’ claims that the deal may be under threat due to German pension liabilities.
The deal has been slow moving as Tata Steel tries to solve the problem of its own 15-billion-pound British steel pensions scheme.
Last month its UK workers had voted in favour of a new pension deal to save their jobs.
Nearly 10,000 workers voted in a ballot in favour of moving from a final salary pension to a less generous scheme in return for job safety and Tata’s promise of nearly 1-billion-pound worth of investment over the next 10 years.
ThyssenKrupp is under pressure from the activist investor Cevian and recently sold its steel venture in Brazil for 1.3 billion euros.
ThyssenKrupp, a vast conglomerate ranging from escalators to car axles, is reportedly already considering an alternative for its steel business should the deal with Tata fail — floating it as a standalone company.
“Talks are ongoing with Thyssenkrupp and to find a sustainable solution for the UK pension scheme,” Tata Steel said in a statement.
