India’s leading steel manufacturer Tata Steel is reportedly in talks to sell some of its European packaging operations to attain regulatory approval for a planned joint venture with German conglomerate Thyssenkrupp.
As per trusted sources, a few days back, the companies agreed over an eight-day extension to a deadline for putting forth remedies to the European Commission, which is concerned that the merged entity could deter competition in certain areas.
According to sources familiar with the matter, the companies haven’t come up with a financial decision yet and remedy proposals are subject to change or amendment before 1 April. The commission also plans to conclude its antitrust investigation into the Thyssenkrupp and Tata Steel tie-up by 13 May. Last year, the companies agreed to join their European steel operations in a 50-50 joint venture to reduce overcapacity and to generate a more influential challenger to industry leader ArcelorMittal, reported sources.
Providing packaging steel assets would reportedly address one of the areas that have been singled out by the Commission in its antitrust review. As per the deal, both companies would own around half of the European packaging steel market, cited industry sources.
A spokesperson for Tata Steel claimed that both companies are dedicated to working closely with all related regulators to ensure the transaction is successful. In the fiscal year 2017-2018, Tata Steel Europe reportedly made sales worth 1.03 billion euros from packaging steel applications in paint, food, and aerosol cans, which accounted for around 13 percent of total revenues. This amount is only slightly less than the 1.16 billion euros generated by Rasselstein, Thyssenkrupp’s packaging steel unit, in 2015-2016, according to the company’s latest data. However, the Rasselstein packaging steel business will not be a part of the remedy offer, claimed sources familiar with the development.
An additional area of concern for the Commission includes electrical steel, where Tata Steel put its Cogent business on the block last year. For now, the companies hope the disposal plans will be enough to avoid further remedies, reported sources.