Tata Steel Europe, a subsidiary of India’s largest steel company by revenues Tata Steel Ltd, has entered into an agreement to acquire three strip products service centres of steel producer SSAB in Nordic, as per a stock market disclosure. It did not share the transaction value.
The European Commission has approved the sale of these service centres to Tata Steel Europe.
SSAB was required to sell these units as a condition of its takeover of another company Rautaruukki Corp.
These centres are located at Halmstad in Sweden, Naantali in Finland and Norsk Stal Tynnplater AS in Fredrikstad, Norway. They offer services such as cutting-to-length, slitting and recoiling, and supply steel to manufacturers in the automotive, construction and electrical supplies industries, as well as to heavy and light engineering companies, and have around 180 people in the team.
The third of the units - Norsk Stl Tynnplater - is already a 50:50 joint venture between Tata and SSAB and the deal will mean a buyout of the remaining 50 per cent stake.
“These acquisitions will strengthen our strip products offering to manufacturers in this region. Improving our local processing capability will significantly enhance our product offering and service levels to customers," said Karl Koehler, chief executive of Tata Steel Europe.
Meanwhile, Tata Steel is retaining its 50 per cent stake in another firm Norsk Stl AS. In this JV the other 50 per cent of SSAB is being acquired by Leif Hübert Stl.
Tata Steel catapulted to become the fifth-largest steel producer with large operations in Europe when it acquired UK's Corus for over $12 billion in 2007, in what remains to date the biggest overseas acquisition by an Indian company. However, as the global economy went into a tailspin with the financial crisis it had become an albatross around the neck of the Indian steel firm.
Last October, it signed a memorandum of understanding (MoU) with Geneva-headquartered The Klesch Group to sell its long products business in Europe and associated distribution activities for an undisclosed amount.
The firm's scrip closed at Rs 365.10 per share, unchanged on the BSE in a strong Mumbai market on Thursday.
Tata Steel is Europe's second largest steel producer, with steel making in the UK and Netherlands and manufacturing plants across Europe. The combined Tata Steel group
has a steel capacity of 29 million tonnes and 80,000 employees across four continents.
SSAB, a leading producer for advanced high strength steels (AHSS) and quenched & tempered steels (Q&T), standard strip, plate and tubular products, as well as construction solutions, has an annual steel production capacity of 8.8 million tonnes and having production plants in Sweden, Finland and the US.
(Edited by Joby Puthuparampil Johnson)