Tata Steel has signed a memorandum of understanding (MoU) with Klesch Group of Switzerland to undertake a detailed due diligence for a potential sale of its Long Products Europe business and associated distribution activities.
A statement from Tata Steel said the MoU covers several U.K.-based assets, including Tata Steel’s Scunthorpe steelworks, mills in Teesside, Dalzell and Clydebridge in Scotland, an engineering workshop in Workington and a rail consultancy in York. It also covers other operations in France and Germany.
Tata Steel employs around 6,500 people at Long Products Europe and its distribution facilities and around 30,500 people across Europe, including 17,500 in the U.K., the statement said. Tata Steel is Europe’s second largest steel producer with steel-making in the U.K. and the Netherlands and manufacturing plants across Europe. Its European operation supplies innovative steel rail, rod, plate, sections and special profile products.
“We will now move into detailed due diligence and negotiations, though no assurance can be given about the outcome,’’ Karl Koehler, CEO, Tata Steel’s European operations, said in a statement. “We will regularly engage with our employees and other stakeholders throughout this process, and will consult with the trade union representatives and works councils.’’
“The European steel is emerging from one of the most challenging economic periods in its history,’’ the company said. Tata Steel had acquired Corus in 2007, and has invested 1.2 billion pound in its UK operations, having trained 1,200 apprentices and graduates. It was adversely impacted and is still recovering from the slowdown in Europe, which followed the Corus acquisition.
On the rationale for the decision, Mr. Koehler said the company was making huge strides on its strategic journey to become a ‘premium, customer-centred steel company’. He said the company had decided to concentrate resources mainly on its strip products activities.
