MUMBAI: Tata SteelBSE 0.69 % UK has decided to sell its Speciality Steels business to Liberty House in the first major sign that the strategy laid out by former chairman Cyrus Mistry for the steel business is being implemented without any deviations. Tatas are expected to sell the business for about £100 million.
Indian-origin businessman Sanjeev Gupta, who owns Liberty House, was among the frontrunners to buy the struggling steelmaker’s plant in the UK before Tatas agreed to opt for a merger with German giant ThyssenKrupp.
The move comes weeks after Tata Sons chairman Cyrus Mistry was ousted. Mistry, along with senior management personnel of Tata Steel, had drawn up a plan to sell parts of Tata Steel’s UK business or merge them with other European giants such as ThyssenKrupp.
Investors were afraid that his departure could lead Tata to veer away from its strategy of disposing loss-making or poorly performing assets. Tata Steel replaced Mistry as chairman last week, appointing independent director OP Bhatt in his place.
The steelmaker has also called for an extraordinary general meeting (EGM) to remove Mistry and Nusli Wadia as directors from their board.
“We are very excited about this deal,” Gupta said. “It gives us momentum to our green steel strategy and will help us build a long-term self-sustaining business. The deal terms have been agreed to and we are targeting the deal to close in 6 weeks.”
Gupta’s strategy is to recycle steel instead of making it fresh from blast furnaces. The speciality business can produce 1 million tonne steel from electric arc furnaces, which can be used in the automobile and aerospace industries.
The letter of intent with Liberty covers several South Yorkshire-based assets, including Rotherham electric arc steelworks, steel purifying facility in Stocksbridge and a mill in Brinsworth as well as service centres in Bolton and Wednesbury, UK, and Suzhou and Xi’an, China.
Speciality Steels, which employs around 1,700 people, makes steel for aerospace, automotive and oil & gas industries. Tata Steel UK employs around 15,000.
Tata Steel UK invested £1.5 billion over the past nine years. The firm in its Monday statement said it is “pursuing a transformation plan to create a sustainable future for its UK strip products business. The success of this plan is likely to influence decisions on future investments”.
“The speciality steel business is independent of the pan-European strip products supply chain and today’s announcement is in line with overall restructuring strategy of the UK portfolio. This is an important step forward in seeking a future for Speciality Steels and we have reached this stage thanks to efforts of employees, trade unions, and management,” said Bimlendra Jha, CEO of Tata Steel UK. Jha added that they will “actively seek solutions to the company’s structural challenges and work with all stakeholders. Among challenges, there is a need to develop a more sustainable business in the UK as well as a self-sustaining future for British Steel Pension Scheme.”
