Tata to offer partial EU packaging sale for Thyssenkrupp deal approval: Sources1 min read . Updated: 21 Mar 2019, 05:35 PM IST
- The two steelmakers on Wednesday agreed an eight-day extension to a deadline for submitting remedies to the European Commission
- The people said no final decisions have been made and remedy proposals could still change or be amended before the new 1 April deadline
FRANKFURT : Tata Steel is likely to offer to sell parts of its European packaging activities to secure regulatory approval for a planned joint venture with Thyssenkrupp, three people familiar with the matter told Reuters.
The two steelmakers on Wednesday agreed an eight-day extension to a deadline for submitting remedies to the European Commission, which has been concerned that the combined entity could hurt competition in some areas.
The people said no final decisions have been made and remedy proposals could still change or be amended before the new 1 April deadline. The Commission aims to wrap up its antitrust investigation into Tata Steel and Thyssenkrupp's tie-up by 13 May.
Thyssenkrupp and Tata Steel last year agreed to combine their European steel activities in a 50-50 joint venture to cut overcapacity and create a more powerful challenger to market leader ArcelorMittal.
Offering some packaging steel assets would address one of the areas that have been singled out by the Commission in its antitrust review. Under their deal, both companies would own about half of the European packaging steel market, industry sources have said.
Thyssenkrupp declined to comment. A spokesman for Tata Steel said it was not appropriate to comment or speculate on the process. "Both companies are committed to working closely with all relevant regulators to ensure the success of this transaction," he said.
In the financial year 2017/2018, Tata Steel Europe made 1.03 billion euros ($1.2 billion) of sales from packaging steel for food, paint and aerosol cans, among others, accounting for about 13 percent of total revenues.
This is only slightly less than the 1.16 billion euros generated by Thyssenkrupp's packaging steel unit Rasselstein in 2015/2016, according to the latest available company data. This business will not be part of the remedy offer, the people said.
In packaging, Thyssenkrupp and Tata Steel are both active in the production of tinplate and blackplate.
Another area of concern for the Commission is electrical steel, where Tata Steel last year put its Cogent business on the block. The companies hope that the disposal plans will be sufficient to avoid further remedies, the people said.
Sources told Reuters earlier this month that Thyssenkrupp and Tata Steel would drive a hard bargain in their discussions with the Commission to not put at risk the strategic and economic rationale of the deal.
This story has been published from a wire agency feed without modifications to the text.