Thyssenkrupp’s split could give Tata Steel an advantage

Thyssenkrupp’s split could give Tata Steel an advantage
04/10/2018 , by , in ALLIED

Calls for splitting up Thyssenkrupp AG, which also led to two top executives departing, had caused some anxiety among Tata Steel Ltd’s investors. Their concerns proved true in that Thyssenkrupp is indeed being split into two entities, but their worst fears appear unfounded. The joint venture (JV) with Tata Steel is still on track.

Thyssenkrupp announced a spin-off into two companies. One will house industrials, with categories such as elevators, components technology and industrial solutions. Another will house the materials business, which includes material services, industries, marine systems and the steel JV with Tata Steel. The new industrials company will be more profitable and likely to trade at higher market valuations.

Thyssenkrupp said it expects to get shareholder approval in a time frame of 12-18 months. It said another priority is to get European Commission approval for the steel JV. This means the JV remains very much on track though some delays could take place in closing.

The JV is very important for Tata Steel, as it will help lower debt on its books and improve profitability.

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