Tata Steel removes obstacles to merger with ThyssenKrupp in Europe

Tata Steel and the trustees of the British Steel pension plan have agreed on key terms for a regulated pro-rata mechanism. If an agreement is reached, the company will pay £ 550 million ($ 710 million) to British Steel's Pension Scheme and sponsor a new pension plan, the company said.

Tata Steel has been in talks with ThyssenKrupp AG to establish a joint venture in Europe since last year as part of its strategy to cut losses amid a global steel market glut. Thyssenkrupp CEO Heinrich Hiesinger cited pension liabilities as a major obstacle to the deal. Resolving pension issues is "the first priority" for the company, Chief Financial Officer Kushik Chatterji told reporters on Tuesday.

The agreement is good news for a potential deal that has faced opposition from union officials and politicians fearing job cuts in Germany. The deal involves the merger of Tata's factories in the Netherlands and the UK with German factories ThyssenKrupp.