China’s steelmaker Jingye Group may takeover Tata Steel UK

BEIJING, Oct 4, 2020, FE. China’s steelmaker Jingye Group is exploring a takeover of the UK’s biggest steel producer Tata Steel, Sky News reported citing unidentified banking sources, Financial Express reported.

The group, which had earlier this year bought British Steel, has expressed ‘tentative’ interest to the company’s parent Tata Group and also the UK government.

However, the discussions haven’t progressed substantially in the weeks. Also, there is no formal sale process for the UK business of Tata Steel, the sources said according to Sky News. If the takeover takes place, Jingye Group would reunite the UK’s two largest steel plants — Port Talbot and Scunthorpe steelworks under common ownership. Tata had owned the Scunthorpe steelworks until 2016 when it was bought by investment firm Greybull Capital.

Jingye Group is said to have strengthened its interest in Port Talbot after its bid to acquire France-based Hayange plant was blocked due to political objections. Even as large part of the UK’s steel industry has been controlled by foreign owners for over a decade, China’s ownership of the two big employers with the unification would attract political scrutiny. Jingye ‘s acquisition of British Steel saved 3,000 jobs along with a pledge to put £1.2 billion to modernise it. Tata Steel in the UK has manpower of around 8,000 people.

A spokesman for Jingye and British Steel declined to comment.

Tata Steel had reached out to the UK government in April this year seeking a £500 million loan against the Coronavirus crisis. However, the plea was rejected by the government after which the group approached for £900 million of government cash by offering up to 50 per cent equity stake in its UK business. According to a source close to the company, a further proposal has been anticipated for weeks but has so far not been forthcoming, as reported by Sky News. A Tata Steel spokesperson said this weekend, “We remain in ongoing and constructive talks with the UK government on areas of potential support,” Sky News reported.