Tata SteelNSE -1.02 % continues with its divestment efforts of its loss-making European operations. On Tuesday, the $18-billion company said that it has started a process of seeking buyers for five of its business units housed under its European arm.
The five business units, spread across the UK, Germany, Sweden, Canada and Turkey, employ 1,000 people.
Earlier, Tata Steel had sold the speciality steels and long products businesses to Liberty Group and Greybull Capital respectively. The proposed sale of the five assets will leave Tata Steel to channelise its resources on its strip products business which is in the midst of forming a joint venture with
ThyssenKrupp.
Tata Steel has been in talks with ThyssenKrupp for nearly two years to merge the two companies’ European steel operations, arguing it was the best option to eliminate overcapacity in the volatile industry. Tata Steel’s strip products facilities are based in Port Talbot, UK, and Ijmuiden, Netherlands.
“The customer bases for the businesses being sold are distinct from the rest of Tata Steel Europe,” said the unit’s CEO Hans Fischer. “These potential sales would enable Tata Steel Europe to focus investment and management resource on the core strip products business and strategic markets,” Fischer added.
The five business units are electrical steels manufacturing and processing facilities in the UK, Sweden and Canada; an aluminium roofing and cladding business in Germany; a steel coating outfit in the UK; an engineering steels service centre also in the UK and a metals company in Turkey.
The proposed divestments will also help Tata Steel to limit financial commitments to the European arm. Tata Steel has a consolidated debt of over Rs 90,000 crore on its books. After the sale of the five assets, Tata Steel will have 20,000 employees in its European arm.
Tata Steel had entered the European market through the $13-billion acquisition of Corus (now Tata Steel Europe) in 2007. However, with the European business not turning out to be profitable, the company started selling its assets one by one.
(This article was originally published in The Times of India)
Source: Economic Times