Steelmaker Tata Steel will separate its UK and Dutch units as it has entered talks to sell the Dutch IJmuiden mill and downstream assets to Swedish steelmaker SSAB, Tata Steel said Nov. 13.
According to Tata Steel, the takeover talks were initiated by SSAB. Discussions with the Supervisory Board and Board of Management of Tata Steel Netherlands have begun and the process will move to the next stage, including due diligence and stakeholder consultations, Tata Steel said.
SSAB confirmed to S&P Global Platts that it would be in talks with Tata to “potentially” acquire the IJmuiden mill and downstream assets but said no specific timeline could be provided at this point.
Tata Steel said in a statement Nov. 13 that the separation of the European units would ensure “separate strategic paths”. Tata Steel would still seek support for the struggling UK arm.
“Tata Steel continues its dialogue with the UK Government on potential measures to safeguard the long-term future of Tata Steel UK and is also reviewing all options to make the business self-sustaining without the need for any funding support from Tata Steel India in the future,” Tata Steel said.
The SSAB-Tata talks are signal further potential major M&A activity in the European steel sector that has struggled not only under a coronavirus-related economic downturn but also overcapacity within Europe raising questions over how a shake-up of the landscape might lead to capacity cuts.
SSAB had been previously rumored to take over German steelmaker Thyssenkrupp’s steel unit, Europe’s second-biggest steelmaker after ArcelorMittal, but steelmaker Liberty made a non-binding offer to take over Thyssenkrupp in October which took the steel market largely by surprise. Thyssenkrupp reiterated that the company remains in non-exclusive talks with several potential partners.
— Laura Varriale