Tata Steel has signed an agreement with global industrial and metals group Liberty House to sell its speciality steel business in the UK for £100 million (₹850 crore).
The sale of assets covers several South Yorkshire-based assets, including the electric arc steelworks in Rotherham, a steel purifying facility in Stocksbridge, a mill in Brinsworth and service centres in Bolton and Wednesbury besides service centres in Suzhou and Xi’an in China.
The speciality steel business employs 1,700 people and taps into sectors such as aerospace, automotive and oil and gas. The assets at Rotherham, Bolton and Stocksbridge were under investigation by the Serious Fraud Office over forgery allegations, which led to the suspension of Mark Broxholme, MD of the speciality steel business.
The asset sale, expected to be completed by March, comes even as Tata Steel’s board on Friday voted to oust incumbent Chairman Cyrus Mistry, who had been pushing for the sale of the bleeding European assets.
Tata Steel UK sold its long product division to Greybulls Capital LLP in June for a nominal fee of £1 to cut its sustained loss.
Having failed to find a buyer for the European assets, acquired from Corus plc in 2007 for $12.1 billion, the company has been selling them in parts in the last year.
Tata Steel is still exploring a joint venture with German steel company ThyssenKrupp for the remaining assets, including the struggling Port Talbot unit. It, however, needs to find a solution for the British Steel pension scheme, which has liabilities of £15 billion.
Bimlendra Jha, CEO, Tata Steel UK, said the Speciality Steels business is independent of the pan-European strip products supply chain and that the sale is in line with the overall restructuring strategy of the UK portfolio. “We now look forward to working with Liberty on the due diligence and other work streams so that the sale can be concluded,” he said.
Independent audit Unite, the UK’s largest worker union, said job security and the future of the pension scheme are the key priorities in the Tata Steel UK and Liberty House Group deal.
Harish Patel, Unite national officer for metals, called for independent due diligence on the proposals besides details on the investment plans of the Liberty House Group.
Sanjeev Gupta, Executive Chairman, Liberty House Group, said the company is eager to join the workforce to develop the business and increase market share.
Welcoming the asset sale, Roy Rickhuss, General Secretary of Community, the steelworkers’ union, said it has spoken to Liberty House Group. “Crucial to this plan will be ensuring that the business’ loyal workforce has a pension plan that provides dignity and security in retirement,” he said.
In the current year, Tata Steel plans to invest £85 million in its UK operations even as it explores all options to sell unsustainable assets in that country.