Tata Steel Ltd has terminated a deal to sell a majority stake in its Southeast Asia business to Chinese steelmaker HBIS Group Co. Ltd and is looking for new investors.
The alloy maker said in a stock-exchange filing that the deal, signed in January, was called off because HBIS failed to get regulatory approvals from the Hebei government.
The deal was valued at $327 million and was expected to be concluded within four months.
Hebei is China’s top steelmaking province and is located in the northeastern region. Last month, Reuters reported that Hebei had moved up the target dates for cutting industrial capacity and relocating plants by the end of October as it pledged to reduce air pollution.
Tata Steel shares dropped 5.7% on Wednesday to a one-year low of Rs 378 apiece in a weak Mumbai market. The stock has lost more than 40% from a high of Rs 646.70 in September last year.
Tata Steel had agreed to sell its 100% stake in Singapore-based NatSteel Holdings Pte. Ltd and a 67.9% stake in Tata Steel (Thailand) Public Company Ltd. The deal involved HBIS owning a 70% stake in the company that was buying the assets while Tata Steel would have held 30%.
The transaction was part of a broader strategy by Tata Steel to reduce its overseas footprint and focus more on the domestic market.
Last year, Tata Steel took control of debt-laden Bhushan Steel Ltd and agreed to buy the steel business of Usha Martin. The company also sought to form a joint venture with Germany’s Thyssenkrupp for its European business but abandoned the plan after European regulators blocked the deal.
Tata Steel is among the top global steelmakers with annual crude steel capacity of 33 million tonnes per annum as on March 2019. The group (excluding Southeast Asian operations) recorded consolidated revenue of $22.67 billion for the fiscal year ended March 2019.
Chinese state-run HBIS Group was established in 2008 by the merger of Tangshan Iron and Steel Group, and Handan Iron and Steel Group of Hebei province. It is among the largest steel makers in the world. The annual revenue of HBIS Group is in excess of $40 billion.