FRANKFURT/DUESSELDORF (Reuters) - A steel joint venture between Thyssenkrupp (TKAG.DE) and Tata Steel (TISC.NS) will be delayed by ongoing talks between the Indian group and its British and Dutch workers, the German company said on Thursday.
Unlike Thyssenkrupp, Tata Steel has yet to reach labour agreements at its Port Talbot plant in Britain and IJmuiden in the Netherlands, a key condition for a deal aimed at cutting overcapacity in the sector.
The groups agreed in principle in September to combine their European steel activities to create the continent’s second-largest steelmaker, behind ArcelorMittal (MT.AS).
Boards at both companies are expected to decide on the 50:50 venture by the end of June, Thyssenkrupp said, with the official signing now planned to take place afterwards. The groups had previously aimed to sign the deal in the beginning of 2018.
The German company did not say when the deal, which had been expected to close the end of 2018, would be concluded, indicating that it could now be delayed into 2019.
Tata Steel’s proposed agreement with workers in the Netherlands has drawn opposition from Thyssenkrupp’s own powerful unions who fear that its German sites could be treated less favourable in the venture.
“We will not accept worse conditions for the German sites,” said Detlef Wetzel, member of the works council of Thyssenkrupp Steel Europe, which is to be merged with Tata Steel Europe.
The deal marks a key step towards Thyssenkrupp’s goal of becoming more focused on technology and industrial goods and cutting its reliance on the volatile steel sector, a shift welcomed by investors who are demanding further changes.
Following the joint venture’s signing, Thyssenkrupp’s management, led by Chief Executive Heinrich Hiesinger, will present a refined strategy to the group’s supervisory board.
“With the planned joint venture Thyssenkrupp achieves a key prerequisite for a sharpening of the group’s strategic target and subsequently also the financial targets,” it said.
That could involve selling Materials Services, Thyssenkrupp’s largest division by sales, in which smaller rival Kloeckner & Co (KCOGn.DE) has long shown an interest.
Editing by Douglas Busvine/Edward Taylor/Alexander Smith