Business as usual pledge as Long Products sales talks proceed

Tata Steel promises business as usual while due diligence is under way on the proposed sale of its European Long Products businesses to The Klesch Group.

A memorandum of understanding has been signed by Tata Steel and The Klesch Group to undertake negotiations for the sale which includes Tata Steel’s heavy sections business, the part of most interest to construction designers.

The Klesch Group will now undertake an extensive detailed due diligence and if successful both companies hope to complete the transaction in the first half of 2015.

The sale would include Tata Steel’s Scunthorpe steelworks, mills in Teesside, Dalzell and Clydebridge in Scotland, an engineering workshop in Workington and an engineering design consultancy in York, as well as other operations in France and Germany.

Tata Steel says full, normal services will be maintained to customers throughout the negotiations and the company’s focus on quality and delivery will be unaffected.

The company has invested heavily in the UK Long Products business since acquiring Corus in January 2007, with investment of some £190M in the past three years alone. A £30M reline of the Queen Anne blast furnace at Scunthorpe has just been completed.

Karl Köhler, Chief Executive of Tata Steel’s European operations, 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.

“We’ve 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 Klesch Group is a global industrial commodities business specialising and trading in chemicals, metals and oil, and employing more than 2,000 people in 17 countries.

Gary Klesch, Founder and Chairman of the Klesch Group said: “We are delighted to announce this agreement with Tata Steel regarding the Long Products Europe business and associated distribution activities.

“The Klesch Group has deep experience in the long products sector, and I look forward to sharing this experience with their team. We believe there is a growing market for the first class products made by this business and we intend to capitalise on this demand.”