Tata Steel Sees UK Pension Deal Soon
Pact may pave way for merger of co’s Europe businesses with Thyssenkrupp
Kolkata: Tata Steel is hopeful of “shortly” reaching a final agreement on a deal to separate its UK pension scheme from its businesses, a development that could pave the way for potential merger of its European businesses with German steel producer Thyssenkrupp.
While Tata Steel and Thyssenkrupp have been in talks to merge their European steel businesses for nearly a year, experts believe Tata Steel’s £15-billion British Steel Pension Scheme (BSPS) has been a major stumbling block.
A Tata Steel spokesman in the UK told ET that the parties involved in the pension deal are in “positive discussions and we are hopeful of reaching a final agreement shortly”. Media reports in the UK on Wednesday had said Tata Steel could be days away from a deal on its pension scheme. Tata Steel UK and the BSPS trustee had in principle agreed on key commercial terms of a Regulated Apportionment Arrangement (RAA) in May. The RAA is subject to formal agreement by the Pension Regulator and non-objection by the Pension Protection Fund, and individual entities that would be party to the RAA.
“These parties are in positive discussions,” the company spokesman said. “Whenever there are significant developments in our business, we always prioritise informing our employees first,” he added.
Tata Steel UK has offered to pay £550 million into its nowclosed pension scheme and give the fund a 33% stake in its UK business.
About 6,250 people are employed by Tata Steel across Wales, including 3,500 in Port Talbot.
Commenting on the significance of the pension deal, Koushik Chatterjee, group executive director (finance, corporate & Europe) at Tata Steel, had told ET in May: “It is our biggest priority and we need to solve it in a robust manner. Only then can we think of all other strategic issues.”
On Thursday, a Reuters report from Frankfurt quoted Thyssenkrupp CFO Guido Kerkhoff saying that the firm will not be rushed into any deal with Tata Steel. “Just because you might read at some point that Tata has a deal it doesn’t mean we can stand up a week later and say, ‘Now we have a joint venture.’ It cannot work that way,” he said.