Tata Steel today said it has initiated talks with German conglomerate ThyssenKrupp AG for a possible joint venture for its European businesses, including UK operations.
The company, part of USD 100 billion Tata Group, also said it is separately starting the processes for sale of its South Yorkshire-based Specialty Steels business and Hartlepool pipe mills (other than the 20-inch Tube Mill) (both in UK).
The announcement has come after the company screened around 200 potential financial and industrial investors for sale of its loss-making UK operations.
"The Board of Tata Steel has decided to also look at alternative and more sustainable portfolio solutions for the European businesses.
"Consequently, Tata Steel has now entered into discussions with strategic players in the steel industry, including ThyssenKrupp AG. Discussions have been initiated to explore the feasibility of strategic collaborations through a potential joint venture (JV)," the firm said in a statement.
However, it was not immediately ascertained whether they will go ahead with their sale plan of the UK business.
The company, part of the USD 100 billion Tata Group, further said: "However, the talks are currently at a preliminary stage and there can be no certainty of a transaction as the outcome depends on consultation and negotiations with various stakeholders."
In March, Tata Steel had announced the sale of its UK business.
The company and its advisers then contacted around 200 potential financial and industrial investors around the world to explore their interest in the business.
In May, seven expressions of interest were taken forward to the next stage of a possible sale process.
Tata Steel's Executive Director for Europe Koushik Chatterjee said: "We have initiated conversations for a strategic collaboration for our European businesses. A potential strategic combination of strip products businesses offers the best prospects to create a premium, world-class strip steel business with the scale and scope of capabilities to compete successfully on the global stage.
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Chatterjee, who is also the Group CFO of Tata Steel, said it is "too early to give any assurances about the success of these talks".
"Such success, especially inclusion of the UK business in the potential JV, would depend on several issues including finding a suitable outcome for British Steel Pension Scheme (BSPS), successful discussions with the UK trade unions and the delivery of policy initiatives and other support from the Governments of the UK and Wales," he added.
Chatterjee said management and employees are continuing to improve the underlying performance of the European business which is very encouraging.
"We continue to be actively engaged with both the UK and the Welsh Governments, the trade unions and the Pension Trustees," he said.
On the sale of the Speciality Steels business, he said: "As part of this development in our European strategy, we will now also begin separate processes for potential sale of the South Yorkshire-based Specialty Steels business and Hartlepool pipe mills (other than the 20-inch Tube Mill) in the UK."
Both of these operations are largely independent of the strip products supply chain with their own specific characteristics, he added.
Tata Steel UK has already received interest from several bidders for Specialty Steels and the pipe mills in each case and a formal process will be commencing shortly, he added.
Tata Steel Europe CEO Hans Fischer said: "This is a welcome development, not just for Tata Steel but also for the European steel sector more broadly.
"Although there's much work still to be done on any strategic collaboration I'm confident that the direction is the right one - towards higher performance and capability to serve customers."
He added that the firm will continue to communicate with its employees and inform and consult both works councils and trade unions as these discussions develop.
Tata Steel Board in its meeting here today also reviewed the performance of the European business.
The board continues to support the business so that Tata Steel Europe can secure the supply chain to customers of the premium steel products they demand and maintain strong relationships with other stakeholders, it said.
On March 29, Tata Steel announced process for sale of its UK business, including the potential sale of the business as a whole or in parts.
The bids were considered in detail on the basis of their commercial value and prospects for the future sustainability and were also reviewed in the light of uncertainties caused by the UK referendum and the outcome of the UK Government's consultation on the British Steel Pension Scheme.
