India giant Tata Steel Ltd. agreed to sell part of its European steel operations, including the giant Scunthorpe plant, to Greybull Capital LLP — a significant step in the company’s efforts to exit the U.K.’s dismal steel industry.
The agreement covers Scunthorpe steelworks in England, as well as mills in Teesside and northern France, which employ a total of 4,800 people, according to a statement from Tata, a unit of the Indian conglomerate. The sale is for a “nominal” fee, the company said. Tata has been in exclusive talks with Greybull, a London-based private equity firm, since December.
Greybull said it’s arranging a 400 million pound ($569.50 million) investment and financing package for the new business. It expects the deal to be completed within eight weeks.
Tata Steel said last month that it plans to sell all its U.K. operations after years of losses, putting 15,000 jobs at risk and raising the alarm of British politicians. The company is still trying to negotiate the sale of its big Port Talbot plant in South Wales. European steelmakers are struggling with prices that have fallen by more than 50% since 2008 and a glut in global supply.
Tata’s U.K. assets were once controlled by state-owned British Steel and bought for $12 billion a decade ago. The country’s steel industry has been in decline for more than a century — hit by high energy costs, inefficient production and a flood of Chinese exports.
For the rest of its U.K. steel business, the company started a formal process to sell the unit and hired advisers KPMG LLP and Slaughter and May.
Tata will allow a “reasonable” amount of time to complete the sale in an attempt to prevent its closure, U.K. Business Secretary Sajid Javid said Friday. The lawmaker had a two-hour meeting with Tata officials in Mumbai last week as the government scrambled to arrange a sale and save the company’s jobs.
Some of Tata’s assets have attracted interest from Liberty House, a private company that’s agreed to buy plants in Scotland. Liberty House founder Sanjeev Gupta said the firm could walk away from a deal if it doesn’t get relief from high energy prices, pension costs and environmental cleanup, the Sunday Telegraph reported over the weekend.
By Thomas Biesheuvel