Tuesday, May 3, 2016

News: Liberty House states intention to bid for Tata Steel UK

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Liberty House has confirmed it will put in a formal bid to buy Tata Steel's UK assets.

The international steel and non-ferrous metals group, has already taken on plants in Newport and Scotland. It also acquired parts of Caparo's advanced engineering products and precision strip businesses in the West Midlands.

Prospective buyer, Sanjeev Gupta, chief executive officer at Liberty House (pictured), spoke to Bloomberg last month and explained the prospects for different parts of Tata Steel's UK business.

Gupta described how downstream businesses that roll and refine steel products are more easy to solve than the "liquid end" of production that use blast furnaces like Port Talbot. Potential solutions include making products from imported steel slab or from domestically available scrap by replacing blast furnaces with Electric Arc Furnaces (EAF) to make "green steel."

Alloy and special steels are made at Tata's scrap-fed mini-mill complex in Rotherham which utilises the more modern Electric Arc Furnace steelmaking route. Ultra-pure remelted steels are made at the nearby Stocksbridge works.

A spokesman for Liberty said: "We can confirm that Liberty will submit a letter of intent to Tata Steel today and has put in place a strong internal transaction steering committee and panel of leading external advisers to take the bid forward."

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Reports have been surfacing ever since the Indian-owned steelmaker concluded that it is exploring all options for portfolio restructuring including the potential sale of Tata Steel UK, in whole or in parts.

Potential buyers include Greybull, who took on assets in Scunthorpe, and a team led by managers in Port Talbot under the name Excalibur Steel UK Limited.

The Government would prefer that Tata sells the UK business as a whole and it has been reported that Liberty House and Excalibur plan to take on all of the UK assets.

The Government has also confirmed that a package of support worth hundreds of millions of pounds will be made available on commercial terms to potential buyers of Tata Steel UK.

Albion Steel is examining a possible takeover of sites in Rotherham and Stocksbridge that are part of Tata Steel's Speciality Steels and "envisages investment of £200m to introduce new technology for producing strip steel and changes in the way the assets are used."

Albion Steel is led by co-founders Dr Rod Beddows, a strategy consultant who advised Tata Steel on the acquisition of Corus, and Tony Pedder OBE, the current chairman at Sheffield Forgemasters and former CEO of Corus.

Albion said that Tata would need to be "prepared to approach its disposal plans in a different way."

The prospect of a management-led bid for Speciality Steels is looking remote given that a number of personnel were suspended last year when auditors uncovered "inappropriate testing and certification procedures." A criminal investigation has been launched.

Tata Steel has not set an ultimate timeline for the disposal but wants to see it happen urgently in order to stem losses and remove uncertainty for employers, suppliers, customers and shareholders.

Tata Steel website

Images: Sanjeev Gupta / twitter

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