Tata Steel on Wednesday said it is in talks with the Klesch Group to sell its long products business in Europe which employs about 6,500 people, including those at its distribution facilities.
“Tata Steel has today announced the signing of a Memorandum of Understanding (MoU) with Klesch Group to undertake detailed due diligence and negotiations for the potential sale of its long Products Europe business and associated distribution activities,” the company said in a statement.
The MoU covers several UK-based assets including Tata Steel’s Scunthorpe steelworks, mills in Teesside, Dalzell and Clydebridge in Scotland, an engineering workshop in Workington and a rail consultancy in York, as well as other operations in France and Germany.
“About 6,500 people are employed at long Products Europe and its distribution facilities. Tata Steel employs 30,500 people across Europe, including 17,500 in the UK,” Tata Steel said.
Karl Koehler, Chief Executive of Tata Steel’s European operations said: “We will now move into detailed due diligence and negotiations, though no assurance can be given about the outcome. We will regularly engage with our employees and other stakeholders throughout this process, and we will consult with the trade union representatives and works councils.”
Explaining the context and rationale for this decision, Koehler said: “We are making huge strides on our strategic journey to become a premium, customer-centred steel company thanks to investment in equipment, technology and customers, together with the substantial contributions from our employees.
He said, “We have improved the competitiveness of Tata Steel’s European operations, including long Products Europe which now supplies more of the innovative steel rail, rod, plate, sections and special profile products demanded by customers.”
The company has decided to concentrate its resources mainly on strip products activities, where it has greater cross-European production and technological synergies, Koehler said.
“We want to build a sustainable business in the UK and further develop our mainland Europe business and we are committed to providing the necessary leadership and financial resources to achieve that,” he added.