The shares of Tata Steel tanked more than 7%, the biggest intraday fall in ten months, after reports that its merger with German steel maker ThyssenKrupp is expected to fail. Both the companies had formally signed the merger agreement in 2018. The German steel maker Thyssenkrupp now expects that a planned joint venture to combine its European steel business with Tata Steel will be abandoned after failing to obtain antitrust approval, according to reports. Both the companies had been trying for more than one and a half years to complete the merger but because of the competition concerns, the merger could not see the light of the day.
Had the merger taken place between Tata Steel and ThyssenKrupp, the combined entity would have become Europe’s second largest steel maker after ArcelorMittal. However, according to a Financial Times report, the EU’s antitrust regulators are concerned that the merger would lead to higher prices of steel used in the car industry, electrical products, coated steel used for food packaging and aerosol cans.
In a bid to get the antitrust approval, Tata Steel and ThyssenKrupp had lately proposed a ‘remedy package’ with offers to sell assets in Belgium, Spain and the UK. They had also proposed to divest two automotive steel plants in Spain and Belgium. The companies might also sell a UK steel operation, according to reports.
ThyssenKrupp had hoped to adjust the commitments already made through several ways, without compromising on the economic logic of the joint venture. According to reports, next week, it will further discuss with commissioner Vestager on the assessment of the commitments by the commission.
Today, on the BSE, Tata Steel shares ended at Rs 487.30 a piece, 6.10% lower than the previous close.