BackTata Steel’s Europe joint venture may get delayed by Cyrus Mistry ouster
Cyrus Mistry was the driver of the Tata Steel's strategy to sell-off its European assets
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Mumbai: Tata Steel Ltd’s efforts to combine its European steel operations with Thyssenkrupp AG may be delayed after parent Tata Sons Ltd abruptly replaced its chairman Cyrus Mistry, according to CLSA Asia-Pacific Markets.
“It was widely believed that Cyrus Mistry was the driver of Tata Steel’s strategy to sell-off its European assets," analysts Mahesh Nandurkar, Abhinav Sinha and Alok Srivastava wrote in a report on Tuesday. His ouster may raise questions about the continuation of this strategy and a major decision on talks with Thyssenkrupp may happen only under a new chairman, they wrote.
Mistry, 48, was replaced by his 78-year-old predecessor Ratan Tata at a board meeting on Monday, calling into question his push to transform Tata Group into a more prudent enterprise by refinancing loans and selling down assets.
Tata, a scion of the founding family, will serve as the interim chief and take part in the search for a more permanent successor over the next four months. Tata Steel in March said that it would consider selling its loss-making UK operations, formerly known as Corus Group Plc and purchased in 2007.
“Corus sale will be a matter of contention with the new management," Ramesh Damani, a member of BSE Ltd and a prominent investor, said by phone from Mumbai. “It is a guiding philosophy of Tatas not to dispose, but turn around businesses."
Shares of Tata Steel, which have surged 60% this year, declined as much as 4.2% to 408.35 rupees in Mumbai. It was the biggest loser on the benchmark S&P BSE Sensex.
Thyssenkrupp is open to integrating Tata’s British unit in a joint venture, and the German company wants Tata to find a way to fund its UK pension-scheme obligations as a precondition, people familiar with the matter said in August, asking not to be identified because the negotiations are private. Tata wants to include the UK division in the Thyssenkrupp project, which would give it a bigger stake in the overall venture, one of the people said. Bloomberg
Swansy Afonso also contributed to this story.
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