As with ThyssenKrupp-Tatta Steel, any merger will likely bring commercial value, says lawyer Richard Ding
As with ThyssenKrupp-Tatta Steel, any merger will likely bring commercial value, says lawyer Richard Ding

How to make the most of a merger

posted by Jacki Buist
in Law
7 September 2018

The ThyssenKrupp-Tata Steel merger will reportedly generate sales of €15bn and produce annual synergies of up to €600m. But any merger is likely to bring commercial value. Richard Ding, corporate lawyer at Excello Law, recommends using the FLOAT factors to get the most benefit:

Financial

Review current procurement matters: pricing, quantities, qualities and margins based on possible increased demands. There could be some benefits through higher bulk discount or better hedging for forward contracts. Work with finance to crunch the numbers.

Legal

There is a legal risk in early termination of existing contracts. Work with legal to review them and look for any pre-approvals needed from suppliers to transfer contracts to the merged entity.

Operational

There will be significant challenges on end-to-end processes and procedures, merging practices, cultures and people. You may need to modify reporting lines, internal arrangements and IT systems. The most common problem is work ethos. Don’t expect changes overnight.

Accounting

Different accounting practices and standards may require changes. Check with accounts to get your business in line so that your accounting is straight and you do not take an accounting hit. 

Taxation 

While some issues, such as customs duties, may stay the same, other areas will change. Work with the tax team and make sure new arrangements will be tax efficient, and will make full use of treaties and laws.

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