Tata Steel today said it is in talks with Switzerland-based Klesch Group for the sale of its Long Products Europe business.
"In order to maximise the prospects of securing a viable future for Long Products Europe, Tata Steel is continuing its discussions with the Klesch Group about a potential sale of the business," a Tata Steel spokesperson told PTI.
The Long Products Europe business manufactures plates, sections, wire rod and semi-finished steel for different markets, including construction, ship-building & engineering, energy and wire drawers. These products are made at its mills in Teesside and Scunthorpe in the UK.
In October 2014, Tata Steel said its European business had signed a Memorandum of Understanding with the Klesch Group to undertake a detailed due diligence and negotiations for a potential sale of its Long Products Europe business and associated distribution activities.
On creating a wholly-owned subsidiary of the Long Products business, the spokesperson said: "The company and the unions agreed at the end of March to explore the potential transfer of its Long Products Europe business into a wholly-owned subsidiary of Tata Steel in Europe, as was reported at the time."
It is aimed at creating a more flexible and independent framework for business to operate in and for strategic options to be progressed, including those contained in the report drawn up by the unions' consultants, Syndex, which the company gave serious consideration to, he added.
"Since then the company has entered into a consultation process about the proposed transfer with affected employees and their union representatives," he said.
Tata Steel is also continuing to develop its future focus on its Strip Products business.
"When the company and the unions met to discuss the Syndex report towards the end of March, they agreed on the need to find a viable and sustainable future for Long Products Europe and committed to continue working together to explore potential support for this vital foundation industry," he said.
Klesch Group is an industrial commodities business with three divisions specialising in the production and trading of chemicals, metals and oil with revenue of USD 4.5 billion across 30 locations in over 17 countries around the world.
However, earlier this month, Tata Steel had said that there are no immediate plans to sell the Long Products business.
"The above process (due diligence) continues," it had said in a BSE filing.
"In the instant matter, we clarify that currently there has been no event that requires additional disclosure (apart from what has already been disclosed) under... Listing agreement," the firm had clarified in the filing.
