Tata Steel UK sells long products business to Greybull
11 Apr 2016
Tata Steel UK Limited today announced the signing of an agreement to sell its loss-making long products business to a family-controlled investment firm, Greybull Capital.
The sale is being made for a nominal consideration, in exchange for Greybull Capital taking on the whole of the business, including assets and relevant liabilities, and securing an appropriate funding package, Tata Steel UK said in a release.
BBC had earlier reported that Greybull could invest up to £400 million to buy Tata's Scunthorpe plant and that a deal could be finalised today (Monday).
Tata Steel said the deal would be completed once a number of outstanding conditions, including transfer of contracts, certain government approvals and the satisfactory completion of financing arrangements, have been completed.
The sale of the Long Products Europe business would also ensure continuity for its 4,800 employees, including 4,400 in the UK and 400 in France.
''Today marks a significant milestone in the sale of the Long Products Europe business. This sale is the best possible outcome for employees who have worked relentlessly to ensure the business's survival, and helped to make it attractive to a potential buyer,'' Bimlendra Jha, executive chairman of the stand-alone Long Products Europe business, said.
''The agreement follows an accelerated process of negotiations between Tata Steel UK and Greybull Capital, who have worked constructively together. The agreement is an important milestone on the road towards continuing steelmaking in Scunthorpe and steel processing in other locations in the UK and France,'' the release said.
The sale covers several UK-based assets, including the Scunthorpe steelworks, two mills in Teesside, an engineering workshop in Workington, a design consultancy in York, and associated distribution facilities, as well as a mill in northern France.
Hans Fischer, chief executive of Tata Steel's European operations, welcomed the news. ''Under these current challenging market conditions in Europe with the soaring levels of imports from China, we are happy that Tata Steel UK and Greybull Capital have entered the final stage of completion of the sale of shareholding in Longs Steel UK. This transaction will offer a future for the Long Products Europe business and its 4,400 employees in the UK,'' he said
Tata Steel Europe said, its board meeting on 31 March considered several options for the portfolio review of Tata Steel UK, and, keeping in view the interest of all stakeholders, decided to commence the process of divestment of its entire shareholding in its subsidiary Tata Steel UK.
Accordingly, it has engaged the services of KPMG LLP as the advisers to the process while Slaughter and May will be the legal advisers to the proposed transaction.
It is the intention of Tata Steel Europe to run a thorough, but expedited sale process by reaching out to a wide universe of potential investors globally.
Tata Steel, Europe's second-largest steelmaker, is expected to formalise the process of selling its loss-making UK plants, inviting interested bidders to submit their offers.
''The formal process has commenced today with the dispatch of the summary information memorandum to potential investors,'' the release added.
Tata Steel is Europe's second largest steel producer, with steelmaking in the UK and Netherlands, and manufacturing plants across Europe.
The combined Tata Steel group is one of the world's largest steel producers, with a steel capacity of more than 28 million tonnes and 80,000 employees across five continents.
Greybull is a family investment office with significant investments in various sectors including aviation, pharmaceuticals, semiconductors, energy, industrials, retail and leisure across UK, mainland Europe and the US.
Within its UK portfolio Greybull owns and controls several companies including The Monarch Group, My Local, Plessey Semiconductors Limited and Arc Specialist Engineering Limited.