GERMAN industrial conglomerate Thyssenkrupp said today (10) it had abandoned plans to merge its steel business in Europe with Indian giant Tata because of expected resistance from the European Commission.
"Thyssenkrupp and Tata Steel expect that the planned joint venture of their European steel activities will not go ahead due to the Commission's continuing concerns," the German company said in a statement.
Having shelved the merger plans and ruled out offering more concessions to Brussels in order to get a green light, Thyssenkrupp said it was now aiming for a stock market listing of its elevators business.
The announcement saw Thyssenkrupp's stock soar, up 13.48 per cent to €12.75, by around 1000 GMT on Frankfurt's stock exchange.
Both Thyssenkrupp and Tata have declined to offer further concessions to Brussels which they say would "affect the synergies expected from the merger" to the point of compromising its economic relevance.
The aim of the joint venture had been to create the second largest European steel company behind multinational giant ArcelorMittal and to join forces in the face of the surge of Chinese steel.
In the wake of the U-turn on the merger plans, the German conglomerate has also binned a proposal, put forward last September under pressure from activist shareholders, to split into two separate groups- ‘Industry’ and ‘Materials.’
Shelving the plan to split is a blow to chief executive Guido Kerkhoff, who had banked on the scheme to push profit and simplify Thyssenkrupp's complicated business structure.
(AFP)
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