Severstal offers Tata Steel $1.9b for Scunthorpe unit: Report
24 Feb 2007
Mumbai: Russian steel major Severstal has offered Tata Steel $1.9 billion for Corus'' Scunthorpe plant, which, British media reports said, the Indian steelmaker may sell to retire some of the debts it has raised to finance its $12.1-billion acquisition of the Anglo-Dutch steelmaker
Scunthorpe plant, which is part of Corus'' assets, the report said, was "Britain''s biggest remaining steelmaking operation".
Steelmakers from Russia, Brazil and Europe have shown interest in buying the Corus assets. "Interested parties include Brazil''s Gerdau, Russia''s Evraz and Arcelor Mittal," the report quoted unnamed sources as saying.
Tata Steel, however, denied any such move and refused to comment, terming the report as speculation.
Tata Steel is busy finalising the financial structure and integration of Corus operations with the company.
Severstal was one of the suitors for Corus and there was widespread speculation that the company''s billionaire owner Alexie Mordashov might put in a counter bid. The company has also raised more than $2 billion through listing in London in November last year.
Analysts, however, say that a sale of Corus unit that produces long products didn''t make sense for Tata Steel. In fact, the acquisition of Corus was for the specialised products and technology, they point out.
The report valued the Scunthorpe division''s at $3 billion without figuring out the debt. Scunthorpe plant produces about 80 per cent of the long products while the Rotherham plant produces the remainder, the report said.
Corus, meanwhile, announced an increase in the prices of long products by up to 10 per cent for deliveries in the second quarter of 2007.
The increase in prices is due to increased demand in many of its markets, the company said in a release.
"Favourable market conditions and strong demand in several of our key sectors, including construction, energy and engineering support this price increase across our product range," said Derek Randall, commercial director of long products division.
Specific product pricing will be provided to customers in the forthcoming weeks, he added.
