JSW Steel joins the race for Tata Steel’s assets in the UK

Seven business groups, including JSW Steel had submitted expression of interest for Tata Steel UK business.

By: ENS Economic Bureau | Mumbai | Published:May 11, 2016 4:36 am

Sajjan Jindal-led JSW Steel is in the race to acquire Tata Steel’s loss-making UK business.

Seven business groups, including JSW Steel had submitted expression of interest for Tata Steel UK business. “As part of company’s growth strategy, the company evaluates several opportunities including the current opportunity of UK steel facilities. It is premature to add any further at this stage,” JSW said in a statement.

According to Credit Suisse, JSW had a debt of Rs 58,100 crore in FY 2015. JSW Steel shares fell 2.92 per cent to Rs 1,288.20 on the BSE on Tuesday amidst worries about the possibility of a spike in debt if the takeover becomes successful. Earlier this month, Jindal’s JSW Energy had said it will acquire a 1,000 mw plant from Naveen Jindal-led Jindal Steel and Power Ltd for Rs 6,500 crore.

Tata said it was also clarifying outstanding points with a “number of other interested parties”. The sale includes Port Talbot, the UK’s largest steelworks, as well as sites at Newport and Rotherham. About 4,000 people work at Port Talbot, some 1,300 at Newport, and about 1,200 at Rotherham. Tata also has operations at Corby, Shotton and Teesside.

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Tata’s Scunthorpe operation, which employs more than 3,000 people, has already been sold to investment firm Greybull Capital for a nominal £1. The company said all the bidders had progressed to the next stage of the sale process, where they would now receive further information about the business.

Indian-origin businessman Sanjeev Gupta’s Liberty House group had earlier confirmed that it will be submitting its bid for Tata Steel’s loss-making UK businesses by Tuesday, according to a media report. The commodities trading firm, which emerged as an early front-runner for Wales-based Port Talbot steelworks, had said that its team was evaluating the bid.

The UK government had been involved in helping to decide which bids would progress. The government has promised to support any buyer of Tata Steel UK by taking up to a 25 per cent stake in a new business and lending hundreds of millions of pounds. Tata Steel put the loss-making business up for sale earlier this year and is hoping for a quick sale process. The company has not publicly set a deadline for any deal, but has made it clear it cannot sustain its £1m-a-day losses indefinitely and wants certainty for workers and customers.

On March 30, 2016, Tata Steel board said, “following the strategic view taken by the Tata Steel board regarding the UK business, it has advised the board of its European holding company — Tata Steel Europe — to explore all options for portfolio restructuring including the potential divestment of Tata Steel UK, in whole or in parts.”

The Tatas, led by Ratan Tata, acquired Anglo-Dutch steelmaker Corus in October 2006 after a tough takeover battle, making it the fifth largest steelmaker in the world. Tata Steel had emerged the winner after a months-long takeover battle with Brazilian rival CSN that ended with a regulator-conducted auction running into nine rounds. In 2010, the Tatas renamed Corus as Tata Steel Europe. JSW Steel has steel plants in Karnataka, Tamil Nadu and Maharashtra with an installed capacity of 18 MTPA.

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