Thyssenkrupp calls for bigger earnings share

BERLIN: Thyssenkrupp AG and Tata Steel Ltd are discussing changing the terms of their steel joint venture in a way that could give Thyssenkrupp a bigger share of earnings, according to people familiar with the matter.

While nothing had been decided yet, one possibility being considered was to increase Thyssenkrupp’s equity stake in the venture and keep the voting rights at a 50-50 split, said the people.

Thyssenkrupp was pushing for changes to the deal after profits plunged at Tata’s European steel business, said the people.

The possible changes follow weeks of mounting pressure on Thyssenkrupp’s chief executive officer Heinrich Hiesinger by activist shareholders and labour representatives to get a better deal. When the venture was announced in September, both companies agreed to an equal split.

A spokesman for Thyssenkrupp said the company would stick to its plan of having a final decision on the venture by the end of this month.

Elliott Management Corp last week wrote to Hiesinger, who has pledged his future on achieving a deal with Tata, warning the initial deal would represent a shift of about €1.9 billion (RM8.95 billion) from Thyssenkrupp.

Cevian, the second-largest shareholder, has calculated a gap of up to €2.5 billion.

Elliott suggested that the difference could be made up with a cash payment from Tata to Thyssenkrupp.