MONTH-IN-BRIEF (Oct 2018)
European Commission States Steel Joint Venture Could Fall Within the Scope of the Merger Regulation
By Chris Johnson
On October 3, 2018, the European Commission commented in the Official Journal of the European Union that the proposed joint venture between Tata Steel Limited, a diversified steel producer, manufacturer, and mineral miner (“Tata Steel”), and thyssenkrupp AG, a diversified industrial group active in steel production, material services, elevator technology, industrial solutions, and components technology (“thyssenkrupp”), could fall within the scope of the European Union Merger Regulation.
The joint venture, which was originally announced in July of 2018, would be a 50/50 contribution from both companies to form a new entity named thyssenkrupp Tata Steel B.V. The joint venture entity “will be positioned as a leading pan-European high-quality flat steel producer with a strong focus on performance and technology leadership.” Dr. Deinrich Hiesinger, CEO of thyssenkrupp, believes the joint venture can create upwards of an additional 5 billion euros in value that the companies could not possibly attain alone, and will also create nearly 4,000 jobs. However, based on the European Commission’s recent comments, Tata Steel and thyssenkrupp will need to pass regulatory merger approval before two of Europe’s largest steel producers and manufacturers can begin their new venture.