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Report: ThyssenKrupp, Tata Steel in talks to revise European JV profit split

ThyssenKrupp AG and Tata Steel Ltd. are said to be discussing changing the terms of their proposed joint venture in Europe in a way that could give the German steelmaker a bigger share of profits, Bloomberg News reported June 13, citing people familiar with the matter.

One of the options under consideration is to raise ThyssenKrupp's equity stake in the partnership and keep the voting rights at a 50-50 split, according to the report. However, nothing has been decided yet, the sources added. ThyssenKrupp is seeking changes to the deal after profits plunged at Tata's European steel business.

The reported discussions follow weeks of mounting pressure on ThyssenKrupp CEO Heinrich Hiesinger by shareholders and labor groups to negotiate a better deal.

Activist shareholder Elliott Management recently asked the company to secure a more favorable deal, saying Tata's recent underperformance skewed the balance against ThyssenKrupp to the tune of €1.9 billion less for the German group if the deal proceeds in its current form.

Elliott suggested the gap could be covered with a cash payment from Tata. Alternatively, ThyssenKrupp could own 82% in the joint venture or Tata could reduce the debt portion, the shareholder added.

The company's second-largest shareholder, Cevian Capital, calculated a gap of up to €2.5 billion.

The 50/50 steel joint venture was announced in September 2017 and was initially slated to close in March but was pushed back to June over labor agreements the companies have been attempting to secure to prevent future disputes.

Tata declined to comment, and a ThyssenKrupp spokesperson said the company would follow its plan to reach the final decision on the joint venture by the end of June, Bloomberg added.