Tata Steel sells European long products business to Greybull

By Carolina Curiel (ScrapMonster Author)

April 12, 2016 01:54:22 AM

CANTERBURY (Scrap Monster): Tata Steel has signed an agreement with private equity firm Greybull Capital towards sale of its Long Products Europe business. The deal is expected to complete in nearly eight weeks time subject to resolution of certain outstanding conditions including transfer of contracts and government approvals. The business will be renamed as “British Steel”.

The “binding sale and purchase agreement” includes the Scunthorpe integrated steelworks, Teesside Beam Mill in Lackenby, Special Profiles in Skinningrove, Hayange Rail Mill in north-eastern France, an engineering workshop in Workington and design consultancy in York.

According to reports, the buyer has announced a GDP400 million investment and financing package to fund working capital and future investments. It has also reached an agreement with key suppliers and trade unions to reset the cost base of the business. The final approval by trade union is subject to a ballot by trade union members over the next few weeks.

Greybull expressed hope that the new changes would make the business competitive. It also noted that the current management team will be retained. "We are delighted to have reached agreement for the acquisition of LPE, which we believe can become a strong business, with a highly skilled workforce and great potential.", said Marc Meyohas, partner Greybull Capital.

Hans Fischer, chief executive of Tata Steel Europe expressed happiness that the deal has come to a final stage. The dumping of cheap steel products from China had posed big threat to its European business. The transaction will offer a future for the Long Products Europe business, Fischer added.

Tata Steel UK had been in negotiations with Greybull Capital ever since the signing of a letter of intent in December last year.