With negotiations going nowhere even after almost two years of long-drawn consultations, it needed that extra push from the principal shareholders to get merger talks going again.So, in the first week of August, Tata Sons chairman N Chandrasekaran decided it was time to take the initiative, flying to Duisburg and Essen in Germany to meet the founding families of Thyssen and Krupp and cement the mega steel alliance that had been in the works since 2016.Salvaging the sprawling European steel operations was top of Chandra’s ‘to-do’ list and consolidating with Thyssenkrupp was the best option on the table. Getting it done wasn’t easy—such deals rarely are. ET spoke to various persons who were directly involved in the negotiations to piece together this narrative of what transpired behind the scenes. Tata Steel and Tata Sons declined to comment for the story.The complex transaction involving multiple jurisdictions, emotive labour issues, pension liabilities and financial restructuring kept getting bogged down in the weeds. And, for the Germans, a mega merger of this scale, ahead of elections in that country, was always fraught with difficulty.A perception that a joint venture with Tata was only a preamble before a complete exit by the diversified industrials group made the stalemate even more intractable. It was important therefore to reassert the fundamental theme—that a merger would rationalise steel operations, synergise Euro 400-600 million of annual cost savings and was not aimed at aggressive restructuring, job cuts or shutdowns of the upstream businesses.With the vision at the top aligning after Chandrasekaran’s trip, the teams got down to brass tacks. Over the next 8 weeks, following a flurry of round-the-clock stakeholder meetings and engagements in London, Germany, the Netherlands and even one in Mumbai in early September--when the Thyssenkrupp top brass flew in--both sides agreed to merge their European steel operations to create the continent’s second-biggest maker of the alloy.The accord to create Thyssenkrupp Tata Steel, a Netherlands-based entity with annual sales of Euro 15 billion, will allow both sides to reduce debt substantially and let the Tata group focus on expansion in the home market.The deal also marked a personal milestone for Chandrasekaran, who became chairman in February vowing to tackle what he called “hot spots” in India’s biggest conglomerate, which has been hamstrung due to high debt and low profitability in many key businesses.After the meeting with the founding families in Germany and the senior management team led by CEO Heinrich Hiesinger broke the ice, the operating teams sought to connect the dots.Chandrasekaran roped in key lieutenant Saurabh Agrawal, the Tata group CFO. On his team were former Standard Chartered banker Nipun Aggarwal, senior vice president in the chairman’s office, and Tata Steel group CFO Koushik Chatterjee. They finetuned and finalised the minutiae of the deal with Guido Kerhkoff, ThyssenKrupp’s group CFO, who led the German team.“Chandra over the last couple of months built a personal rapport with the Thyssenkrupp management team. This helped address a lot of issues,” said an executive. “We were of the view that this is not an exit but an important strategic step. A combined company will continue to thrive and grow.”Just like the Tata family, Friedrich Alfred Krupp also began his entrepreneurial journey with a steel factory in 1811, predating Jamsetji Nusserwanji Tata’s start about 150 years ago. Fritz Thyssen established Thyssen, Fossoul & Co., a company making hoop iron for barrels, crates, baling etc, in 1867.Till today, Krupp’s family trusts own a significant shareholding in the operating companies, similar to the corporate structure at the Tata group. So, both sides had shared history and a rich legacy to draw inspiration from. Both have also stayed invested in their businesses through the various up-and-down cycles. That contextualised the basic foundation of the merger.The structuring itself posed its own set of challenges. There were two ways of going ahead–leverage the new entity to the hilt and then reduce debt by bringing in a third part investor or through a share sale. The more conservative route was to well capitalise the business while keeping the upfront leverage low and not rely on external capital commitments.That second option undeniably found favour. “From day one, it is a viable, financially sound company,” said an executive. About Euro 2.5 billion of Tata Steel Europe’s senior debt will go to the joint venture, while Thyssenkrupp will transfer around €6.5 billion of debt and other liabilities. “We wanted an equal equity JV. So, despite the differences in scale and revenues of the two operations, we have adjusted it through debt,” the person said.The final roadblock got cleared in August when Tata Steel reached a landmark deal that allowed it to reduce £15 billion in British pension liabilities, long seen as the principal deal breaker.