Dr. Heinrich Hiesinger, CEO of thyssenkrupp AG: ”With the joint venture we create a highly competitive European steel player – based on a strong industrial logic and strategic rationale. This will help secure jobs and value chains in European core industries. ”
The joint venture will be managed as one integrated business through a holding company headquartered in the Amsterdam region of the Netherlands. thyssenkrupp Tata Steel will have a two-tier governance structure that comprises a Supervisory Board and a Management Board each with six members, on which thyssenkrupp and Tata Steel will have equal representation. In the time ahead, thyssenkrupp and Tata Steel will jointly make decisions on the leadership team and their responsibilities. Respective employee representation structures in European countries and a European Works Council (EWC) will be retained. In addition, an Employee Executive Committee (EEC) will be established, in which the Management Board and employee representatives of the joint venture will regularly discuss strategic issues.
Due diligence and fairness opinions have confirmed the economic viability of the new company and the expected annual recurring synergies of approximately €400 to €500 million. After closing, the synergies will be generated in several areas including procurement, consolidation of overhead and through a better asset utilization. It is expected that there will be opportunities in capital expenditure management and working capital optimisation to realize additional synergies.
„Growth in higher value segments”
At the same time, the future set-up and positioning of the joint venture will enable growth in higher value segments, exceeding industry growth rates. This will be achieved among other measures by redeploying R&D efforts to strengthen the positioning as quality and technology leader.
Leveraging cost synergies will require a rationalization in workforce over the years ahead by up to 4,000 jobs in operations and support functions that is expected to be shared roughly evenly between the two parties. Furthermore, the complete production network is to be reviewed starting in 2020 with the aim of integrating and optimizing the production strategy for the entire joint venture.
Until closing, thyssenkrupp Steel Europe and Tata Steel in Europe still operate as separate companies and as competitors. Only after closing, thyssenkrupp Steel Europe and Tata Steel in Europe will be integrated as one company.
With signing of the Joint Venture agreement, thyssenkrupp has paved the way for the refinement of the Group strategy and thus also for the adjustment of financial targets. The Management Board will present the refined strategy to the Supervisory Board in an extraordinary meeting in the week beginning July 9, 2018.