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Report: Tata May Have Hard Time Finding Buyer for U.K. Business
04/07/2016 - After Tata Steel announced that it would look to divest its U.K. business last week, the hope has been for a quick sale to a buyer with a turn-around plan.
But it's an unlikely scenario, according to The (India) Economic Times, which cited a report from financial services firm Macquarie.
"Steelmaking in the U.K. under the current spread of steel and raw material makes no sense to us at all. New buyers have struggled, as we saw in the case of the Teeside facility of Tata Steel, which was acquired by SSI of Thailand 3 years back and now finally has had to be mothballed," Macquarie analysts Sumangal Nevatia and Rakesh Arora wrote, according to the newspaper.
Tata's U.K. business includes the integrated Port Talbot works in Wales. It is the U.K.'s largest steelmaking facility.
"Port Talbot has little future for its blast furnaces and will have to be ultimately shut down," they said.
One potential buyer is Sanjeev Gupta, founder of metals trading firm Liberty House. Gupta has said he believes there is a future for U.K. steelmaking, one that would be built around electric arc furnaces, according to the Daily Mail.
Meanwhile, Gupta told The Guardian newspaper that acquiring Tata's U.K. business is something Liberty would have to closely consider, but added that no decision have been made. However, he said his firm is interested.
“It is big step forward for us, there is no denying that,” Gupta told the newspaper.
“There is no definite in anything. We have to engage with Tata, (and) we have to then make a proposition. I believe we will make a proposition, but that proposition has to be accepted and it depends on who else we are competing against and what ideas they have.”
"Steelmaking in the U.K. under the current spread of steel and raw material makes no sense to us at all. New buyers have struggled, as we saw in the case of the Teeside facility of Tata Steel, which was acquired by SSI of Thailand 3 years back and now finally has had to be mothballed," Macquarie analysts Sumangal Nevatia and Rakesh Arora wrote, according to the newspaper.
Tata's U.K. business includes the integrated Port Talbot works in Wales. It is the U.K.'s largest steelmaking facility.
"Port Talbot has little future for its blast furnaces and will have to be ultimately shut down," they said.
One potential buyer is Sanjeev Gupta, founder of metals trading firm Liberty House. Gupta has said he believes there is a future for U.K. steelmaking, one that would be built around electric arc furnaces, according to the Daily Mail.
Meanwhile, Gupta told The Guardian newspaper that acquiring Tata's U.K. business is something Liberty would have to closely consider, but added that no decision have been made. However, he said his firm is interested.
“It is big step forward for us, there is no denying that,” Gupta told the newspaper.
“There is no definite in anything. We have to engage with Tata, (and) we have to then make a proposition. I believe we will make a proposition, but that proposition has to be accepted and it depends on who else we are competing against and what ideas they have.”
