UPDATE: 6:55 a.m. EDT — Tata Steel confirmed Monday it has signed an agreement to sell its Long Products Europe business to the British investment firm Greybull Capital. The deal, which covers several British businesses including the Scunthorpe Steelworks, will safeguard 4,400 jobs in the U.K. and 400 jobs in France.
“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,” Bimlendra Jha, executive chairman of the Long Products division, said in a statement.
In a separate statement, Tata Steel said it “has decided to commence the process of divestment of its entire shareholding” in its British business. “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 company, which directly employs nearly 15,000 people in the U.K., said. “The formal process has commenced today with the despatch of the Summary Information Memorandum to potential investors.”
The names of the potential buyers were not disclosed.
India’s Tata Steel will begin the formal process of selling its U.K. steel business Monday. So far, the London-based Liberty House Group is the only company that has publicly expressed interest in purchasing Tata’s loss-making steel plants, including the Port Talbot Works in Wales.
However, in an interview with the Sunday Telegraph, Sanjeev Gupta — the founder and owner of Liberty House — said he was “not married” to the idea of buying Tata Steel’s U.K. business and that he may still back out.
“It is too big a deal for us to get wrong. It could put the whole company at risk,” Gupta said.
Tata Steel, Britain’s largest steelmaker, has been squeezed by cheap imports of Chinese steel into Europe, and is believed to be losing nearly 1 million pounds ($1.44 million) a day. European Union regulations restrict the tariffs that member nations can levy on imports, and, as a result, Chinese steel imports have more than doubled over the past two years.
“I’m afraid no one in Europe saw the impact of what would happen if China started to dump steel on the world market,” Tata Group’s former chairman Ratan Tata reportedly said last week, adding that the company’s U.K. steel operations were “underinvested and overmanned.”
Currently, Tata Steel directly employs 15,000 people in the U.K. including 7,000 in Port Talbot alone. Additionally, another 25,000 jobs may be affected across the supply chain if the company shuts down its British operations.
The sale of Tata Steel’s Scunthorpe plant is also expected to be finalized Monday. The plant, which employs nearly 4,000 people, has been up for sale since 2014 and the investment firm Greybull Capital began negotiations to purchase the business in December. The company, whichdescribes itself as “a family office that makes long term investments in private companies,” is planning to invest up to 400 million pounds in the plant and would ask its workers to accept a pay cut, according to media reports.