Tata Steel bidder Thyssenkrupp comes under pressure from investors to consider alternative strategies

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Investors are turning up the heat on Thyssenkrupp, the firm hopes are pinned upon to save Britain's steel industry (Source: Getty)

The German industrial firm vying to pick up Tata Steel is plotting alternative strategies if the deal to save Britain's largest steel operator fails.

Thyssenkrupp is considering spinning off its European steel division into a separate company that could be listed, according to reports today by German publication WirtschftsWoche.

Read more: Tata Steel pension scheme edges towards safety

Chief executive Heinrich Hiesinger is under pressure from investors to consider alternatives, with sources saying a merger with Tata Steel, the company's preferred route, is not to everyone's liking.

A spokesperson for Thyssenkrupp told Reuters: "There is no new status."

Tata Steel and Thyssenkrupp are in negotiations over the merger of their European steel units, with Tata's UK operations causing the biggest headache.

Talks have stalled in recent weeks, with the sticking point being Tata Steel's mammoth UK pension deficit. The German firm is only prepared to go ahead with the merger if scheme can be left behind. 

Read more: Tata has agreed to sell its Specialty Steels business for £100m

Regulators and unions have given the green light to plans for Tata Steel to pump £1bn into the pension schemein return for members accepting adjusted payouts.

With workers receiving reduced returns alongside the cash injection, the hope is that pension trustees will be given sufficient comfort to allow the scheme to be cut adrift. This, it is hoped, will provide the catalyst for Tata Steel and Thyssenkrupp to get back round the table to hammer out a merger deal.

Tags: Steel crisis