- At least four bidders pull out after landmark U.K. referendum
- Tata Steel to hold board meeting Friday to discuss next steps
Tata Steel Ltd. has temporarily halted the sale of its U.K. assets, after many of the shortlisted bidders pulled out due to uncertainty in the wake of the Brexit vote, people with knowledge of the matter said.
Potential buyers told Tata Steel that the U.K.’s surprise vote to leave the European Union last month raised uncertainty about the viability of its operations there, the people said. At least four shortlisted bidders pulled out of the process, according to one of the people, who asked not to be identified because the information isn’t public.
Tata Steel is still keen to sell the business and may resume the process after the effects of Brexit become clearer, the people said. The assets, which include the Port Talbot facility, had attracted interest from at least seven potential buyers including India’s JSW Steel Ltd. and Hebei Iron & Steel Group, people with knowledge of the matter have said.
Britain’s steel industry has been hit by high energy costs, inefficient output and a flood of cheap Chinese exports. That led to Tata Steel in March saying it planned to sell its U.K. operations after years of losses, putting 15,000 jobs at risk and raising the alarm for British politicians.
Representatives for Tata Steel in India didn’t immediately respond to e-mails seeking comment, while a spokesman for the U.K. business declined to comment. The BBC reported earlier Thursday that Tata Steel will soon announce a pause in the sale of most of its U.K. business, without saying where it got the information.
Tata Steel shares fell 4.8 percent in Mumbai trading Thursday, paring their gains this year to 22 percent.
“The cloud of uncertainty over steelworkers’ heads needs to be lifted by Tata giving binding commitments about its long-term intentions regarding Port Talbot and its U.K. strips business,” U.K. labor union Unite said in a statement. “Unite will be pressing Tata for clarity over its intentions and ensuring it sticks to its promise to be a responsible seller and act ethically.”
The U.K. government will do all it can to assist with the sale and the offer to support buyers is unchanged, Minister Anna Soubry told Parliament Wednesday. Tata Steel may decide to keep the unit if the U.K. government offers a bailout and helps ease its pension liabilities, one of the people said.
“We all understand the massive impact of the referendum result, and we appreciate that Tata Steel, like so many other businesses, need time to review and evaluate the implications of Brexit,” British Labour lawmaker Stephen Kinnock said in a statement. “However, it is now absolutely critical that Tata Steel and the U.K. government come forward with a specific timetable.”
Tata Steel will hold a board meeting Friday to discuss the next steps for its U.K. business after the decision to halt the sale, according to the person.
Buyout firm Greybull Capital LLP agreed in April to buy Tata Steel’s giant Scunthorpe steelworks in England, as well as mills in Teesside and northern France.