Swedish Steelmaker Hints Merger of Tata Steel Europe Business

BY
Realty Plus

Swedish steelmaker SSAB AB is exploring a combination with Tata Steel’s European business as a back-up plan to a deal with Thyssenkrupp AG amid industry consolidation, according to people familiar with the matter.

SSAB is holding preliminary talks with Tata Steel of India as it seeks merger options, the people said, asking not to be identified as the matter is private. The Swedish company, which has a market value of around $3.2 billion, would gain control of Tata Steel’s European business if they pursued such a deal, they said.

Steel producers in Europe are under pressure to consolidate, having been battered by weaker demand and global overcapacity, combined with soaring prices of iron ore and high supply of low-cost imported steel. As a result, several major producers are speaking to each other about potential mergers.

SSAB is among steelmakers interested in acquiring steel assets from Thyssenkrupp, the German conglomerate that’s restructuring to ensure its survival. That is their preferred partner due to the strategic fit, two of the people said. But the Swedish pursuit was complicated last week by news that Sanjeev Gupta’s Liberty Steel had made a non-binding indicative offer for the German business.

Thyssenkrupp previously tried to partner with Tata Europe but the joint steel venture faced opposition in 2019 from European regulators. It’s also held initial talks with SSAB and Tata as well as domestic rival Salzgitter AG over a potential combination with its steel unit, people familiar with the matter have previously said.

Tata, which operates the iconic blast furnace at Port Talbot in the UK and another big plant in the Netherlands, has been trying to find a solution for its European business since being hit by the 2016 commodity crisis, though many of its troubles stem from before then.

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TATA
Global
Merger
Commodity
Business

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Publish date : 2024-07-12 22:26:06

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