Tata Steel has agreed to sell its struggling UK business to family office Greybull Capital for a “nominal sum.”
The deal covers 4,800 jobs and assets including “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,” according to the release on the deal.
Indian company Tata has been in talks with potential buyers of its UK business since putting its business here up for sale at the end of last month.
There was concern that the sale process could result in the closing down of some or all of the operations, with Tata saying that the business case for making steel in Britain has “rapidly deteriorated” due to falling prices and rising costs.
However, in today’s release the company says that “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.”
Bimlendra Jha, Executive Chairman of the stand-alone Long Products Europe business (the division being sold), says in the statement:
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.
After the deal completes Tata Steel UK will be rebranded “British Steel”, a name it was known by prior to its takeover by Tata. Greybull will invest £400 million in the new company, according to the Financial Times.
The FT reports that the group has also reached an agreement with trade unions and key suppliers to “reset the cost base of the business.”
Paul McBean, the chairman of the Scunthorpe works multi-union committee, told the Scunthorpe Telegraph that the deal is “unbelievable news”, saying: “We have saved the local steel industry, thousands of jobs, the town and the community as a whole.”
Hans Fischer, Chief Executive of Tata Steel’s European operations, says:
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.