MADRID – Tata Steel Ltd. said on Wednesday that it will continue to pursue a merger of its European business with Thyssenkrupp AG’s Steel Europe division after the European Commission opened an in-depth investigation into the deal, citing competition concerns.
The Indian group said it had noted the commission’s concerns and will continue its discussions with the regulator, pledging to provide further information and analysis of the merger.
Tata said it continues to believe in the “strong industrial logic and rationale for the proposed joint venture,” which would create Europe’s second-largest steelmaker by revenue.
Thyssenkrupp wasn’t immediately available for comment.
The commission said on Tuesday the deal could reduce competition for automotive grades, certain coated steels and electrical steel used in engineering products.
Analysts and shareholders have expressed mixed reactions to the deal, which was a central part of a plan initiated by the former Thyssenkrupp chief executive, Heinrich Hiesinger, to shift the conglomerate away from steelmaking and toward more profitable capital-goods manufacturing.
Activist investors Cevian Capital and Elliott Management Corp. were reportedly unhappy with the terms of the deal, while analysts at Jefferies said it likely wouldn’t meet expectations for value creation.
Hiesinger’s replacement as CEO, Guido Kerkhoff, has since embarked on a more expansive restructuring, under which the group will be split into two separate companies.