After a long, somewhat drawn out and certainly quite nerve wracking process, Tata Steel have finally offloaded their long products business to Greybull Capital. It’s a deal that will not only sale 4,400 jobs in Scunthorpe, but will revive a name long since retired – British Steel.
Talks between the two companies began in December, three months after the Indian steel manufacturer controversially announced their plans to quit the UK market and sell their entire business. If no bidders could be found, the plants in Scunthorpe and Port Talbot would close, putting over 15,000 jobs at risk both in the plants and along the supply chain.
Greybull have now completed their purchase of the long products division in Scunthorpe, saving around 4,000 jobs. The investment firm paid a nominal £1 fee (along with the company’s debts) for the business which produces things like railway tracks and steel for construction. Along with the Scunthorpe plant, the deal includes steelworks in Lincolnshire, Teesside, York and Workington. There’s also a plant in France, with around 400 workers. Indeed, all workers have accepted a 3% pay cut as a temporary measure to preserve their jobs, along with a revised terms and conditions.
The business will now be renamed British Steel, reviving a brand which hasn’t been seen in the UK since 1999. Formally the name of the state-owned steel industry, British Steel disappeared back in ’99 with the creation of Corus, which Tata purchased in 2007. Meanwhile, Greybull have announced that their recently purchased plants are now back into operating profit as a result of a turnaround plan which included making higher-value products, though the firm are ready to inject around £400 million into the business.
Peter Hogg, commercial director at British Steel said that the jobs at the firm were now secure, saying: “We have no plans to make any job reductions. The future of the business is based on that strong turnaround plan.”
The real talking point, however, is whether Greybull are plotting a move for the rest of Tata Steel’s UK operations. Reports have suggested that that’s the case, but Greybull are declining to comment. Marc Meyohas said instead: “Our entire focus has been on getting this deal to where it is and launching British Steel. Being investors in the steel industry you would expect any active shareholder to look at what is going on in the broader market. Tata’s other assets that may be for sale … we are going to be approached and we are going to be looking at that.”
He also said that though the negotiations were ‘tough’, Tata had operated in a responsible fashion. Meanwhile, Hogg said that the long profits business would be profitable in the current financial year after withdrawing from plate production – the worst performing area of their business. “It’s been about making the whole business more cost-competitive, more focused and more agile. It’s a big business but it can have a smaller business feel when it’s not part of a larger organisation,” he said.