Tata Steel U.K. has signed a Letter of Intent (LoI) with Liberty House Group, the metals company run by tycoon Sanjeev Gupta, to enter into exclusive negotiations for the potential sale of its Speciality Steels business for an enterprise value of £100 million.
The LoI covers several South Yorkshire-based assets including the Rotherham electric arc steelworks, the steel purifying facility in Stocksbridge and a mill in Brinsworth as well as service centres in Bolton and Wednesbury, U.K., and in Suzhou and Xi’an, China, said the statement adding that the speciality steels business employed about 1,700 people making steel for the aerospace, automotive and the oil & gas industries.
Other assets
This year, Liberty acquired significant assets in South Wales, the West Midlands, Scotland and Kent from Tata Steel.
It is believed that Tata Steel aims to retain the rest of its U.K. businesses and is in talks with German firm ThyssenKrupp to merge their European steel operations, potentially giving the combined entity 40 per cent market share. Tata Steel is pursuing a transformation plan to create a sustainable future for its U.K. strip products business. The success of this plan is likely to influence decisions on future investments, said the company statement.
“The Speciality Steels business is independent of the pan-European strip products supply chain and today’s announcement is in line with the overall restructuring strategy of the U.K. portfolio. We will continue to work closely with trade unions and will communicate any material news on this issue to the employees on an ongoing basis,” Tata Steel U.K. CEO Bimlendra Jha.
A Tata Steel spokesperson said, “The speciality business currently has 1,700 employees and if the transaction completes, Tata Steel Europe will continue to employ 8,000 people in its U.K. operations”.
Tata Steel U.K. has invested £1.5 billion in the last 9 years.
Sanjeev Gupta, executive chairman of the Liberty House Group said: “We look forward to working with Tata Steel over the coming weeks to complete this hugely important milestone transaction.”
Unions react
Workers’ unions welcomed the move while demanding an independent audit of the proposals. Community, the steelworkers’ union, said in a statement that it had spent the last year “campaigning to save the business, after Tata announced in March that it planned to sell its U.K. assets welcome the development.”
“After months of uncertainty and delay from Tata, this will be welcome news for... steelworkers whose jobs depend on the success of this business,” said Community’s general secretary Roy Rickhuss, adding that the number one priority for Community will be ensuring that Liberty has a plan to protect jobs and provide long-term investments.
Unite, the U.K.’s largest union, has called for an independent audit of the sale process. “Of course, the devil is very much in the detail which is why we will be asking Tata Steel to ensure that we can conduct independent due diligence on its proposals,” said Unite national officer for metals Harish Patel. Liberty House and Tata Steel expect to close the deal early in the first quarter of 2017.
