Tata’s UK pension scheme could derail planned merger with Thyssenkrupp
Tata Steel UK is seeking regulatory approval to spin off its £15bn scheme into a standalone entity as Thyssenkrupp will not take on its pension liabilities in a tie-up
London — Investors expecting a deal this year in Tata Steel’s talks to merge its European assets with Germany’s Thyssenkrupp risk disappointment, given complications associated with the Indian-owned firm’s British pension scheme. Tata and Thyssenkrupp shares have firmed on hopes a merger would trigger European steel capacity cuts. Tata Steel UK, Britain’s top steel maker, is seeking regulatory approval to spin off its £15bn scheme into a standalone entity because Thyssenkrupp will not take on its pension liabilities in a tie-up. Tata says its UK unit, expected this year to post its first profit in five years, will fail if it has to keep ploughing funds into a scheme with 13 times more pensioners than paying employees. The regulator, however, has yet to be convinced about "imminent insolvency" — a precondition for spinning off a scheme — when Tata’s UK unit is turning a profit. "There are still significant issues to be resolved," said a spokesperson for the pensions regulator. Expert...
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