Tata Steel Long Products Ltd.
In a setback to Tata Steel, its deal to sell Dutch unit to Sweden’s SSAB may have come unstuck.
“We have carefully evaluated Tata Steel IJmuiden and have concluded that an acquisition would be difficult for technical reasons. We cannot be sufficiently certain that we could implement our industrial plan with the preferred technical solutions as quickly as we would wish. We cannot align Tata Steel Ijmuiden with our sustainability strategy in the way desired,” says Martin Lindqvist, President and CEO at SSAB, said in a statement on January 29.
It was in November that Tata Steel had confirmed the talks to sell the unit, based in Ijmuiden in the Netherlands. This was a fresh attempt from India’s largest steelmaker to find a solution to its troubles in Europe, more than a year after a merger with Germany’s thyssenkrupp was blocked by European Commission.
Apart from the Dutch unit, Tata Steel’s European operations include the facility in the UK. The company was hoping to sell the Dutch unit, among the most profitable steelmaking sites in Europe, to also turnaround the UK operations.
The company’s stock dived by over 3 percent at the Bombay Stock Exchange, as the new trickled in. It was down 3.2 percent at the time of writing.
Investors would be worried about the failure to seal the deal, and what the company now does with the 1.7 billion Euros of debt on Tata Steel Europe’s books. Proceeds from the sale will be used to lower the debt on the company’s books.
The Netherlands unit has an annual capacity of 7.5 million tonne and has 10,000 employees.
Moneycontrol has reached out to Tata Steel for a comment, and will update the story once the company responds.
What SSAB said
“After deeper analysis and discussions, it became clear that there were limited possibilities to integrate IJmuiden into the SSAB strategic framework. Discussions with Tata Steel have therefore concluded,” the company said.
Lindqvist further noted that the acquisition didn’t meet SSAB’s overall vision for a fossil-free production. Europe has been pushing steelmakers to reduce their carbon footprint.
“The synergies that we saw in the transaction would not fully justify the costs and investments required for our desired transformation. This means that overall, the transaction would not meet our financial expectations,” he said.
The group’s goal is to be the first in the world, in 2026, to supply fossil-free steel to market and to be a fossil-free company by 2045.
(This is a developing story, please check back for more details)
