Tata Steel agrees sale of Long Products Europe business
EUROPE: On April 11 Tata Steel UK signed a binding agreement to sell its Long Products Europe division to Greybull Capital ‘for a nominal consideration’. The move forms part of Tata Steel Europe’s plans to divest its entire Tata Steel UK business.
The stand-alone Long Products Europe business employs 4 400 people in the UK and 400 in France. It comprises the Scunthorpe integrated steelworks which supplies most of Network Rail’s rail requirements as well as products for export, the Teesside Beam Mill in Lackenby, Special Profiles in Skinningrove, the Immingham Bulk Terminal port facility, an engineering workshop in Workington and design consultancy in York, as well as the Hayange rail mill in France and distribution facilities in the UK and Ireland.
The transaction is expected to be completed within eight weeks, subject to government approvals, transfer of contracts and Greybull Capital completing a £400m investment and financing package with banks and shareholders which would be used to fund working capital and future investments. The new owner would take on the whole of the Long Products Europe division, including its assets and liabilities, which would then trade under the name British Steel.
Greybull Capaital said an agreement to ‘reset the cost base’ of the business has been reached with key suppliers, and an agreement with trade unions is subject to a ballot over the next few weeks. The existing management team is to be retained, and the search for a permanent CEO is underway.
Tata said the agreement followed ‘accelerated’ negotiations. ‘This sale is the best possible outcome for employees who have worked relentlessly to ensure the business’s survival, and helped to make it attractive to a potential buyer’, said Bimlendra Jha, Executive Chairman of Long Products Europe.
‘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’, said Hans Fischer, CEO of Tata Steel’s European operations.
Greybull Capital is a family investment office with European and US investments in sectors including aviation, pharmaceuticals, semiconductors, energy, industrials, retail and leisure. Its UK portfolio includes The Monarch Group airline business, shop chain My Local, Plessey Semiconductors Ltd and Arc Specialist Engineering Ltd.
‘We are delighted to have reached agreement for the acquisition of Long Products Europe, which we believe can become a strong business, with a highly skilled workforce and great potential‘, said Greybull Capital partner Marc Meyohas. ‘I would personally like to thank Tata Steel, the trade unions and the British and French governments for their support, which was essential in ensuring the agreement. We are now focused on taking the deal to completion in order that the business can start its next chapter with confidence.’