Cyrus Mistry led Tata Steel Ltd has decided to seek strategic joint ventures with leading international steel makers including with German industrial group Thyssenkrupp AG for its European business after the sale of its UK assets hit a roadblock due to uncertainty arising from Britain’s decision to exit the European Union.
Tata Steel has decided to evaluate “alternative and more sustainable” solutions for the European business. Consequently, Tata Steel has now entered into discussions with strategic players in the steel industry including Thyssenkrupp AG,” said Tata Steel in a statement on late Friday night after the lengthy board meeting of the company.
However, the company cautioned that the talks were currently at a preliminary stage and there could be no certainty of a transaction as the outcome depends on consultation and negotiations with various stakeholders.
The announcement came after the UK’s business secretary Sajid Javid met Tata Steel representatives on Friday in Mumbai to discuss the future of the company’s UK assets just before the board meeting.
We have initiated conversation for a potential strategic combination of its European businesses. A potential strategic combination of strip products businesses offers the best prospects to create a premium, world-class strip steel business with the scale and scope of capabilities to compete successfully on the global stage,” said Koushik Chatterjee, group executive director and Tata Steel’s executive director for Europe adding that the success of the new round of talks would depend largely on discussions with employees over pensions and government policy initiatives in the UK.
“It is too early to give any assurances about the success of these talks. Such success, especially the inclusion of the UK business in the potential joint venture, would depend on several issues including finding a suitable outcome for the British Steel Pension Scheme, successful discussions with the UK trade unions and the delivery of policy initiatives and other support from the Governments of the UK and Wales. These are necessary for realizing a sustainable business in the UK,” Chatterjee added.
Tata said there had been seven expressions of interest in buying its business after it announced in March it was selling its loss making UK assets. The bids have been fully considered and reviewed in the light of "uncertainties" caused by Brexit.
Besides, Tata will begin separate processes for the potential sale of the South Yorkshire-based Speciality Steels business and the Hartlepool pipe mills (other than the 20-inch Tube Mill). Both of these operations are largely independent of the strip products supply chain and Tata has already received interest from several bidders for Speciality Steels and the pipe mills.
Hans Fischer, chief executive officer of Tata Steel Europe, said : "This is a welcome development, not just for Tata Steel but also for the European steel sector more broadly. Although there's much work still to be done on any strategic collaboration I'm confident that the direction is the right one - towards higher performance and capability to serve customers. We will continue to communicate with our employees and inform and consult both works councils and trade unions as these discussions develop."
