Tata Steel Ltd has initiated discussion with strategic players in the steel industry, including Thyssenkrupp AG to explore the feasibility of strategic collaborations through a potential joint venture for its European business. This is a change from its earlier strategy where Tata Steel had decided to completely exit the business in the United Kingdom.
On March 29, 2016 Tata Steel announced it would explore strategic alternatives for its UK business, including the potential sale of the business as a whole or in parts. The company and its advisers then contacted around 200 potential financial and industrial investors around the world to explore their interest in the business. The company has also deeply engaged with the Governments of the UK and Wales at every stage of the process.
On May 9, seven expressions of interest were taken forward to the next stage of a possible sale process. The seven companies were given access to extensive business information and management team presentations in order for them to progress their interest and submit refined bids.
Bidders were engaged in detailed discussions with the Tata Steel Europe management. "The bids received have been carefully considered in detail on the basis of their commercial value and prospects for the future sustainability of the UK business for a range of stakeholders. The bids have also been reviewed in the light of the uncertainties caused by the UK referendum and the outcome of the UK Government’s consultation on the British Steel Pension Scheme," Tata Steel said in a statement issued late on Friday night.
"Taking the above issues into account, the Board of Tata Steel has decided to also look at alternative and more sustainable portfolio solutions for the European businesses. Consequently, Tata Steel has now entered into discussions with strategic players in the steel industry, including Thyssenkrupp AG," it added.
However, the talks are currently at a preliminary stage and there can be no certainty of a transaction as the outcome depends on consultation and negotiations with various stakeholders.
To sell Yorkshire plant, Hartlepool pipe mills separately
Koushik Chatterjee, Group Executive Director and Tata Steel’s Executive Director for Europe, said the success of these talks, especially the inclusion of the UK business in the potential joint venture, would depend on several issues including finding a suitable outcome for the British Steel Pension Scheme, successful discussions with the UK trade unions and the delivery of policy initiatives and other support from the Governments of the UK and Wales.
Chatterjee further commented: “As part of this development in our European strategy, we will now also begin separate processes for the potential sale of the South Yorkshire-based Specialty Steels business and the Hartlepool pipe mills (other than the 20-inch Tube Mill) in the UK. Both of these operations are largely independent of the strip products supply chain with their own specific characteristics. Tata Steel UK has already received interest from several bidders for Specialty Steels and the pipe mills in each case and a formal process will be commencing shortly.”