London, April 11: Having already decided to sell off its European venture, on Monday Tata Steel announced that it has entered into an agreement to sell its long products business in Europe to Greybull Capital, an investment firm, for a “nominal” consideration.
It is worth mentioning here that the Indian steel major’s long products business in Europe employs about 4,800 people in the U.K., while another 400 are employed in France.
Following losses worth nearly $3 billion on its UK operations, earlier this month, Tata Steel had announced that it will explore options to put its entire portfolio there up for sale. The announcement came about 10 years after it forayed into Europe by acquiring the Anglo-Dutch Corus for over $8.1 billion.
A statement issued by the steel company on Monday said, “The sale for a nominal consideration would be in exchange for Greybull Capital taking on the whole of the business, including assets and relevant liabilities, and securing an appropriate funding package.”
According to the statement, the agreement will be finalized once a number of exceptional conditions are resolved, including transfer of contracts, specific government approvals as well as the satisfactory completion of financing arrangements.
For the uninitiated, long products comprise wire rods, rails and billets used by construction, engineering, energy and automotive industries. On the other hand, flat products comprise coils, and heavy plates used for automotives, heavy machinery, pipes, tubes, construction, packaging and appliances.
According to Bimlendra Jha, Tata Steel’s executive chairman of the stand-alone long products Europe business, the sale is the optimal outcome for employees who have worked unremittingly to ensure the survival of the business as well as helped to make it smart to a potential buyer.
The deal comes in the wake of an accelerated process of talks between Tata Steel UK and Greybull Capital, and is being considered an important milestone in continuing steelmaking in Scunthorpe as well as steel processing in other sites in the UK and France.
The deal includes a number of UK-based assets like the Scunthorpe steelworks, an engineering workshop in Workington, two mills in Teesside, a design consultancy in York, and related distribution facilities, in addition to a mill in northern France.
“Under these current challenging conditions in Europe with soaring levels of imports from China, we are happy Tata Steel UK and Greybull Capital have entered the final stage of completion of the sale of shareholding in longs steel UK,” said Hans Fischer, chief executive for Tata Europe.
Hans Fischer, Chief Executive of Tata Steel’s European operations, also welcomed the news. He said, “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.”
Long products Europe business of Tata Steel comprises facilities like Scunthorpe integrated steelworks
Teesside Beam Mill, Lackenby; Special Profiles, Skinningrove; Hayange Rail Mill, north-east France; Immingham Bulk Terminal (port terminal); Engineering workshop, Workington; Design consultancy, York; and Associated distribution facilities in the UK and Ireland.