Thyssenkrupp and Indian peer Tata Steel on Wednesday struck a preliminary agreement to combine their European steel operations in a 50-50 joint venture, creating the continent`s No.2 steelmaker after ArcelorMittal.
The new company, to be named Thyssenkrupp Tata Steel, would be headquartered in or near Amsterdam, Thyssenkrupp said in a statement on Wednesday after the two companies signed a memorandum of understanding (MoU).
"Under the planned joint venture, we are giving the European steel activities of Thyssenkrupp and Tata a lasting future," Thyssenkrupp CEO Heinrich Hiesinger said. "We are tackling the structural challenges of the European steel industry and creating a strong No.2."
The MoU, widely expected after Thyssenkrupp last week said a deal could still be reached this month, outlines synergies of 400-600 million euros ($480-720 million) a year as well as up to 4,000 job cuts, about 8 percent of the joint workforce.
The MoU will be followed by negotiations about the details of the transactions as well as due diligence - a detailed look at each other`s accounts - before a joint venture contract can be signed at the beginning of 2018, Thyssenkrupp said.
The signing of the joint deal will require the approval of Thyssenkrupp`s supervisory board and Tata Steel`s board of directors as well as that of the European Commission.
($1 = 0.8328 euros)
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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