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 pounds subject to due diligence and corporate approvals.
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 employs about 1,700 people making steels for the aerospace, automotive and the oil & gas industries.
This year Liberty saved major assets in South Wales, the West Midlands, Scotland and Kent from closure after acquiring them from Tata Steel.
Tata Steel is believed to retain the rest of U.K. businesses and is in talks with German firm ThyssenKrupp about merging their European steel operations to have 40% market share.
The company 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 UK CEO Bimlendra Jha, who is trying to resolve company’s structural challenges and work with all stakeholders including as a self-sustaining future for the British Steel Pension Scheme.
Tata Steel U.K. has invested 1.5 billion pounds of capital over the last nine years and the company's boards consider the technical feasibility and economic returns of investments when taking decisions, as well as their affordability.
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. We recognise the world-class skills of the Speciality Steels workforce and are eager to join with them to develop the business and increase market share, both domestically and internationally using our global presence. As part of that process we will now engage fully with the trade unions and the local community.”
Unite, UK’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 adding that as a matter of urgency, we must see security for the pension scheme to which men and women have dutifully contributed all their working lives.
Community, the steelworkers’ union spent the last year campaigning to save the business, after Tata announced in March that it planned to sell its UK assets welcome the development.
After months of uncertainty and delay from Tata, this will be welcome news for the thousands of 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 have a proper plan to protect jobs and provide the long term investment necessary to grow the business.
Liberty House and Tata Steel expect the acquisition to complete early in the first quarter of 2017.
