Tata Steel, Thyssenkrupp call off merger

A proposed deal by Thyssenkrupp, a European steel producer, and Tata Steel, based in India, to merge their steel businesses in Europe has been called off after the European Commission (EC) signaled the two parties would have to sell off more of their assets.

Following recent conversations between the two steel companies and the EC, the parties have decided not to continue with the proposed merger, which was first announced June 30, 2018, in light of the EC ruling.

The companies say the remedies the EC offered to ensure approval of the deal would negate any advantages of combining the two companies and eliminate the synergies afforded by merging their operations in Europe.

In its review of the proposed merger, the EC raised competition concerns in several product groups. The two companies submitted a package of proposed solutions to address the EC’s concerns. However, according to Thyssenkrupp, the EC took the amendments as an opportunity to conduct another market test, which did not resolve its concerns. 

Following the decision, Thyssenkrupp’s board has announced plans to propose the separation of the company into two independent companies: its elevator business and its steel business.

If it had been allowed to proceed, the merger would have created the second largest steel producer in Europe behind ArcelorMittal.