Thyssenkrupp expects EU to block Tata steel merger | All Charts News - breaking news english

# # # # # # #
Steel worker takes a steel sample at a blast furnace in Duisburg, GermanyImage copyright EPA

Thyssenkrupp has said it expects a proposed steel merger with Tata Steel to be blocked by the European Commission over competition concerns.

The deal was expected to create Europe’s second-biggest steelmaker, after ArcelorMittal.

However, the tie-up has been subject to an in-depth European Commission (EC) competition investigation.

An EC spokesman said the Commission had until 17 June to make a decision about the proposed merger.

Thyssenkrupp said that it and Tata Steel had offered “significant further concessions” to try to assuage Commission concerns about the deal, but that had not resolved the situation.

More concessions than those already offered would make the merger uneconomical, the firm said.

Thyssenkrupp is now considering a new approach, which could include a partial listing of its lifts division.

As part of this new plan, the executive board will recommend not going ahead with a plan to split the business in two.

Thyssenkrupp unveiled plans last September to create two divisions:

  • Thyssenkrupp Industrials, spanning its lifts, car parts and plant engineering businesses
  • Thyssenkrupp Materials, which included materials trading and shipbuilding.

Rising trade tensions between the US and China and fears of a disorderly Brexit have dented share prices, forcing a number of companies including Continental and Volkswagen to review plans for spin-offs and listings.

Thyssenkrupp chief executive Guido Kerkhoff’s plan failed to lift the company’s share price. Analysts say that after two profit warnings, the firm’s share price is too low to make the merger deal work.

Image copyright Getty Images
Image caption Port Talbot is the UK’s biggest steelworks

Competition probe

The European Commission opened its investigation in October, after concerns that customers would face higher prices and fewer suppliers.

The proposed deal included the UK’s biggest steelworks, at Port Talbot in Wales.

Unions initially welcomed the merger, but then said they were “unconvinced” after it started looking more like a takeover.