Tata Steel Gains $7 Billion From Netherlands Business Sale
In the Netherlands, Tata Steel operates a profitable company and is a strategic match for SSAB. The steel mill in IJmuiden and the associated downstream properties are estimated at $7-8 billion together. SSAB officials are reviewing the estate. After they complete the technical and financial evaluations, they will come up with a binding offer,” a senior banker said.
Tata Steel Europe is currently looking to decouple the 'issue sector' in the UK from profitable business in the Netherlands as the process would offer two advantages. The UK government is prepared to help the steel company, but administrators fear that the advantages applied to the UK entity will also be transferred to the Dutch company. Thus, business separation will assist the company to obtain the government aid. Secondly, the buyers don't want to shoulder the struggling business in Port Talbot, UK. It is estimated to be 7-8 billion dollars, but it is not clear if SSAB will want it as a discounted purchase due to Europe's prevailing negative market conditions. The materialisation of the deal of over Rs 50,000 crore would significantly reduce Tata Steel's net debt from Rs 96,500 crore in September to half. In an open bid, Tata Steel purchased Corus Plc's European company for $12 billion in 2007. But since the recession in 2009, the entity has mostly reported losses.
The site in IJmuiden is Tata Steel's key hub in the Netherlands, which also includes downstream production sites elsewhere in the world. Approximately 7.3 million tonnes of strip steel are manufactured annually by IJmuiden, serving automotive manufacturing, packaging and construction customers. Over the years, however, Tata Steel has reduced production in Port Talbot to 3 MT from 10 MT.TAGGED :