Tata agrees to sell UK steel business to Liberty for £100m
9 FEBRUARY 2017 • 2:30PM
Tata Steel has signed a definitive agreement to sell its Yorkshire-based speciality steel business to Sanjeev Gupta's Liberty group for £100m, safeguarding around 1,700 jobs.
The deal will mean several steel mills in South Yorkshire, as well as four service centres in Bolton and across China, will transfer to Liberty’s ownership, bringing relief to workers who have been unsure of the business’s future for almost 12 months.
Indian conglomerate Tata put its UK business up for sale early last year having endured years of losses thanks to high energy costs, global overcapacity and China dumping subsidised steel. The division produces metal for customers including Rolls-Royce and Jaguar Land Rover.
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The news comes just days after Tata Steel, the firm's European arm, announced it was back in profit thanks to a combination of operational improvements, currency movements, lower energy costs and stronger steel prices.
The division made £74m of earnings before interest, tax, depreciation and amortisation in the third quarter, compared to a £90m loss during the same period last year, when the steel industry was deep in crisis. copyright link/content/dam/business/2016/04/23/tata3-large_trans_NvBQzQNjv4BqknWtNqbf_ggLEul4V1OoOsU2kv_qs8N3cN0GjzyMofA.jpg
Tata Steel's blast furnaces at its Scunthorpe plant CREDIT: LINDSEY PARNABY
Having launched a sale, Tata later said it had “paused” the process in order to explore a tie-up with German rival ThyssenKrupp. It emerged in November that Tata had signed a letter of intent to start exclusive talks with Liberty for the speciality business.
Bimlendra Jha, chief executive of Tata Steel UK, said the sale was an “important step forward” in securing a future for the workers, including those at the Port Talbot site.
There were fears that, if the ThyssenKrupp deal went ahead, the Welsh plant would be closed in favour of other plants on the continent. However, in December, Tata said it would guarantee jobs at the plant for five years.
“We will be handing over a business which has been transformed following difficult decisions to restructure and re-focus on higher-value markets,” Mr Jha said.
The firm is currently consulting with employees on proposals which will reduce risk and secure the firm’s future, he added. Part of this was discussing what would happen to the UK pension scheme, which had a near-£500m deficit when Tata first announced it was considering a sale, although this has since narrowed. Unions have advised their members to vote for a deal which would mean it would be spun off. copyright link/content/dam/business/2016/04/13/94947749_Sanjeev_Gupta_the_head_of_the_Liberty_Group_smiles_following_a_ceremony_at_Dalzell_stee-large_trans_NvBQzQNjv4BqYsmWvrrUa2K5zmnFcEH9LAXFAmvOP02AU1t2iuC9I5Q.jpg
Sanjeev Gupta, head of the Liberty Group CREDIT: DANNY LAWSON
The purchase of Tata Steel will make Liberty one of the largest steel and engineering employers in the UK with more than 4,000 workers at plants located across Britain.
It has a strategy of buying up distressed assets in order to expand its industrials portfolio, and in recent months has bought a Scottish aluminium smelting plant from Rio Tinto, as well as plants in South Wales and the West Midlands.
Mr Gupta said: “[Tata Steel] is one of only a handful of such operations in the world and I am confident it will flourish within our group.” He added that Liberty will now be able to melt scrap steel to create products, and that in the future he hoped this would be done using renewable power.
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