Tata Steel Rises 5% As UK Unit Moves Closer To Merger With Thyssenkrupp

Tata Steel shares rose as much as 5 per cent to hit intraday high of Rs 432 after the company informed the BSE that its subsidiary Tata Steel UK offered British unions a deal guaranteeing jobs and investment on Wednesday in return for pension cuts, moving the company closer to merging its European assets with Germany's Thyssenkrupp.

Britain's largest steelmaker offered to guarantee production at UK's largest steel plant in Port Talbot, Wales, for five years, and to invest across its British business, subject to the business achieving financial targets.

British unions said Tata had offered to invest 1 billion pounds ($1.26 billion) in its UK business over the next decade, and had committed to try to avoid any compulsory redundancies for five years.

Tata said it would support employees until 2021 by "investing in their skills" but in return it was looking to change employment terms and close the deficit-laden final salary pension scheme to future accrual.

Unions said in a statement they will vote on the plan in January.

Koushik Chatterjee, group executive director Tata Steel and executive director for its European business said: "The agreement between Tata Steel UK and the unions today marks an important step forward in the journey to develop a sustainable future for our UK steel business. These are unprecedented times for the steel industry globally with multiple risks including global economic uncertainty, slow manufacturing growth and currency volatility which continues to present significant challenges to the business."

Tata Steel ended 4.7 per cent higher at Rs 431.30. (With inputs from Reuters)