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Tata UK Finds a Buyer for its Specialty Steel Business
11/29/2016 - Tata Steel Ltd. has a preliminary deal to sell its U.K.-based specialty steel business to Sanjeev Gupta’s Liberty House Group, the company has announced.
In a statement, Bimlendra Jha, chief executive of Tata Steel UK, said the agreement is in keeping with the company’s effort to restructure its U.K. portfolio.
“This is an important step forward in seeking a future for (the specialty steels unit), and we have reached this stage thanks to the efforts of employees, trade unions and management. We now look forward to working with Liberty on the due diligence and other work streams so that the sale can be successfully concluded,” he said.
The deal includes a mini-mill and a steel refining shop in England, a narrow strip mill, also in England, and service centers in the U.K. and China. The unit employs about 1,700 people and primarily sells into the aerospace, automotive, and oil and gas markets.
Liberty House began as a metals trading firm launched from Gupta’s flat while he was in college. Recently, however, the company has been buying up steelmaking assets. In the fall of 2015, the company restarted a mothballed rolling mill in Wales. And earlier this year, Liberty acquired two affiliated plate mills from Tata.
But this deal gives Liberty its first operational melt capacity, reports the (London) Financial Times.
“We recognize the world-class skills of the (specialty steels) workforce and are eager to join with them to develop the business and increase market share, both domestically and internationally using our global presence,” Gupta said, according to the newspaper.
Separately, he told India’s Mint newspaper that he is not worried about the structural issues facing the world’s steelmakers because the company is immune to swings in the international raw materials markets.
“Our business model is fool-proof and based on U.K. scrap,” he told the newspaper, adding that scrap-based production keeps costs in check and requires less energy.
He also said his company will soon begin talks with Tata’s union workforce.
Gupta had been eyeing Tata’s U.K. strip business, which had been for sale until Tata scrapped those plans in favor of exploring a potential joint venture with Germany’s thyssenkrupp. Talks between Tata and thyssenkrupp are ongoing, and, according to India’s CNBC TV18, are now in their final stages.
However, the broadcaster said Tata retirees would have to accept a change in the pension plan.
The plan -- and the liabilities that come with it -- have been a stumbling block in reaching any sale agreements, reported The Wall Street Journal.
Bimlendra referenced the challenges arising from the pension plan, as well as the general business challenges before the company, in the statement regarding the sale of the specialty steel business.
“We continue to actively seek solutions to the company’s structural challenges and work with all stakeholders. Among those challenges, there is the need to develop a more sustainable business in the U.K. as well as a self-sustaining future for the British Steel Pension Scheme,” he said.
“This is an important step forward in seeking a future for (the specialty steels unit), and we have reached this stage thanks to the efforts of employees, trade unions and management. We now look forward to working with Liberty on the due diligence and other work streams so that the sale can be successfully concluded,” he said.
The deal includes a mini-mill and a steel refining shop in England, a narrow strip mill, also in England, and service centers in the U.K. and China. The unit employs about 1,700 people and primarily sells into the aerospace, automotive, and oil and gas markets.
Liberty House began as a metals trading firm launched from Gupta’s flat while he was in college. Recently, however, the company has been buying up steelmaking assets. In the fall of 2015, the company restarted a mothballed rolling mill in Wales. And earlier this year, Liberty acquired two affiliated plate mills from Tata.
But this deal gives Liberty its first operational melt capacity, reports the (London) Financial Times.
“We recognize the world-class skills of the (specialty steels) workforce and are eager to join with them to develop the business and increase market share, both domestically and internationally using our global presence,” Gupta said, according to the newspaper.
Separately, he told India’s Mint newspaper that he is not worried about the structural issues facing the world’s steelmakers because the company is immune to swings in the international raw materials markets.
“Our business model is fool-proof and based on U.K. scrap,” he told the newspaper, adding that scrap-based production keeps costs in check and requires less energy.
He also said his company will soon begin talks with Tata’s union workforce.
Gupta had been eyeing Tata’s U.K. strip business, which had been for sale until Tata scrapped those plans in favor of exploring a potential joint venture with Germany’s thyssenkrupp. Talks between Tata and thyssenkrupp are ongoing, and, according to India’s CNBC TV18, are now in their final stages.
However, the broadcaster said Tata retirees would have to accept a change in the pension plan.
The plan -- and the liabilities that come with it -- have been a stumbling block in reaching any sale agreements, reported The Wall Street Journal.
Bimlendra referenced the challenges arising from the pension plan, as well as the general business challenges before the company, in the statement regarding the sale of the specialty steel business.
“We continue to actively seek solutions to the company’s structural challenges and work with all stakeholders. Among those challenges, there is the need to develop a more sustainable business in the U.K. as well as a self-sustaining future for the British Steel Pension Scheme,” he said.
