Tata Steel UK agrees sale and purchase agreement for long products Europe business
The sale for a nominal consideration, would be in exchange for Greybull Capital taking on the whole of the business, including assets and relevant liabilities, and securing an appropriate funding package.
The deal would be completed once a number of outstanding conditions have been resolved, including transfer of contracts, certain Government approvals and the satisfactory completion of financing arrangements.
The Long Products Europe business employs 4,800 people – 4,400 in the UK and 400 in France.
Bimlendra Jha, Executive Chairman of the stand-alone Long Products Europe business, said: “Today marks a significant milestone in the sale of the Long Products Europe business. 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.”
The agreement follows an accelerated process of negotiations between Tata Steel UK and Greybull Capital who have worked constructively together. The agreement is an important milestone on the road towards continuing steelmaking in Scunthorpe and steel processing in other locations in the UK and France.
The sale covers several UK-based assets including the Scunthorpe steelworks, two mills in Teesside, an engineering workshop in Workington, a design consultancy in York, and associated distribution facilities, as well as a mill in northern France.
Hans Fischer, Chief Executive of Tata Steel’s European operations, also welcomed the news. He said: “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. This transaction will offer a future for the Long Products Europe business and its 4,400 employees in the UK.”
Following the recent advice from the Tata Steel Board to evaluate all options for the portfolio review of Tata Steel UK, the Board of Tata Steel Europe at its meeting held on March 31, 2016 reviewed several options and, keeping in view the interest of all stakeholders, has decided to commence the process of divestment of its entire shareholding in its subsidiary Tata Steel UK.
Accordingly, it has engaged the services of KPMG LLP as the advisers to the process while Slaughter and May will be the legal advisers to the proposed transaction.
It is the intention of Tata Steel Europe to run a thorough, but expedited sale process by reaching out to a wide universe of potential investors globally.
The formal process has commenced today with the despatch of the Summary Information Memorandum to potential investors.
KPMG and Slaughter and May also advised Tata Steel UK on the successful divestment process of Longs Steel UK, the subsidiary of Tata Steel UK.
Tata Steel and its advisers are committed to work together and conduct the process in a transparent and time bound manner.
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