Thyssenkrupp warns 6,000 jobs could go after regulator scuppers European steel merger
Thyssenkrupp today admitted defeat in its proposed Tata Steel merger, but sent shares higher as it revealed plans to spin off its elevator business.
Read more: Thyssenkrupp shares soar as it abandons plans to split company
Shares surged even further on the admission that the EU looks set to block the deal, after rising in double digits earlier today following Reuters’ initial report on the matter.
Thyssenkrupp’s share price rose 19.2 per cent to €13.39 after it blamed the European Commission’s “continuing concerns” over the tie-up between it and Tata’s European steel ventures.
The company said remedies it had offered the EU were not enough to win its approval.
“From the point of the view of Thyssenkrupp and Tata Steel, further commitments or improvements would adversely affect the intended synergies of the merger to such an extent that the economic logic of the joint venture would no longer be valid,” the firm said.
Tata’s shares fell just one per cent.
Thyssenkrupp will also ditch plans to separate itself into two companies – an industrial arm containing its car parts and elevators and a materials division.
“The economic downturn and its effects on business development and the current capital market environment have led to the separation not being able to be realised as planned,” Thyssenkrupp said.
Instead it will launch an initial public offering of its elevators business.
Read more: Thyssenkrupp still hopeful deal with Tata will go through
Chief executive Guido Kerkhoff reportedly said it will cuit 6,000 jobs in a bid to boost profits, including 4,000 in Germany and the others abroad.