Tata Steel may sell its struggling UK unit to Greybull Capital: report
22 Dec 2015
Tata Steel may sell its struggling UK unit to investment firm Greybull Capital, helping the country's largest steelmaker to salvage its long products division, which makes steel used in construction.
Reports citing industry sources said Tata Steel is expected to favour Greybull and a deal is likely latest by next month.
Tata Steel has been on the lookout for a buyer for its long products unit, which employs some 6,500 people across Europe with the majority based in Scunthorpe, northeast England.
Tata Steel said in October it could axe about 1,200 jobs at its Scunthrope unit (See: Tata Steel to axe 1,200 jobs in UK), and in November, Tata Steel Europe chief executive Karl Koehler said the unit had no future within the company beyond the current financial year, which ends in March 2016.
Britain has been at the receiving end of a manufacturing sector meltdown and this has severely impacted the steel industry, with nearly 4,000 UK steel jobs - about one-fifth of the sector's workforce - lost in October alone.
Steel industry blame their woes on UK and EU policy and on Chinese 'dumping' of steel - selling products at below fair value.
Tata Steel, UK's largest steelmaker, has been trying to sell its long products unit in Scunthorpe and Scotland, which makes steel used in construction, since last year with increasing urgency as a global steel crisis intensified and prices hit decade lows (Tata Steel close to selling UK long products plant: report).
The current crisis in Britain's steel industry saw Tata axe 1,200 in Scunthorpe and Scotland last month, on top of a further 1,000 earlier in the year. The company also wrote down the value of its UK assets by £866 million.
Long products are used in construction, railways, shipbuilding and engineering.
Industry sources say the deal could be worth less than £500 million , and that the buyer would not take on any debt.
Reports said, besides Greybull, others like equity firm Endless are also interested in Tata Steel unit.
A Tata Steel spokesman the company is "still assessing all strategic options".
Tata Steel lost a chance to offload the struggling unit, earlier, in August when Klesch Group, a global commodities producer and trader, withdrew its interest, laying the blame on the British government.