Tata, German firm to create Europe’s No. 2 steelmaker

Tata Steel said it had agreed to the terms of a 50-50 joint venture with Germany’s Thyssen krupp to create Europe’s second-largest steel company after Lakshmi Mittal’s Arcelor Mittal. The JV, which has been under discussions since September last year, combines the European steel businesses of the Indian steel major with the German firm to create Thyssen krupp Tata Steel BV. The joint venture will create a strong pan-European steel company that is structurally robust and competitive, Tata Steel chairman N Chandrasekaran said. “This is a significant milestone for Tata Steel and we remain fully committed to the long-term interest of the joint venture company.” The definitive agreement signed between the two companies includes a “proper compensation” for a valuation gap between the companies, which means that in case of an initial public offering (IPO) of the JV, Thyssen krupp will receive a higher share of the proceeds, reflecting an economic ratio of 55/45. Thyssen krupp said it also has the right to exclusively decide on the timing for a potential IPO.