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German manufacturer eyes British Steel's French plant

2019-08-05

A German group is interested in buying British Steel’s French factory, according to people aware of the situation, even as efforts drag on to prevent a break-up of the stricken company.

British Steel collapsed into insolvency more than two months ago after the government rejected its plea for a bailout, throwing into doubt the future of one of the country’s largest manufacturers.

With a process under way to find a buyer to rescue the business out of liquidation, the government and unions want it to be sold as a single going concern rather than flogged off piecemeal.

They believe that is the best way to preserve production and the jobs of the company’s 5,000-strong workforce, more than half of which is based in Scunthorpe, Lincolnshire.

However, some of British Steel’s smaller factories and individual business units have attracted the attention of potential suitors.

Its Hayange mill in northern France has been eyed up by Saarstahl, a German steel producer, according to three people with knowledge of the situation. The facility employs around 400 people producing rails for train lines and tramways and is profitable, according to a person close to the business.

Hayange is supplied with steel blooms from Scunthorpe but in recent weeks the French site has taken trial deliveries of material from Saarstahl for test rolling, according to two people. Saarstahl might also be interested in British Steel’s Dutch manufacturing subsidiary, FN Steel, they added.

Saarstahl said it was “not taking part in the official M&A process” and that it did not comment on customers. Based in the west of Germany close to the French border, Saarstahl churned out 2.8m tons of crude steel last year, a similar amount to British Steel, with sales of €2.5bn and 6,400 employees.

Andrea Leadsom, the new business secretary, this week visited the Lincolnshire steelworks and said she was “determined to do absolutely everything to support British Steel [and] to find a new buyer”.

Yet the fact that managers at Hayange, whose customers include the French state-owned railway operator SNCF, are looking at alternative supplies of steel suggests the possibility of Scunthorpe closing is being taken seriously.

Among the bidders for British Steel are Liberty House, the industrial conglomerate led by the businessman Sanjeev Gupta. It declined to comment. Another is a Turkish group, while a Chinese steelmaker that had tabled an offer, Jingye, has pulled out.

Although British Steel’s overseas subsidiaries are not in liquidation, their shares are under the control of the official receiver, who has a duty to obtain the best outcome for creditors and will ultimately decide on the company’s fate.

Greybull Capital, the private investment firm criticised for its role as British Steel’s owner, wants to regain control of a number of the company’s smaller sites, but not the main Scunthorpe plant, where financial problems are concentrated. However, any attempt to cherry pick assets is likely to spark opposition.

A French engineering group, Systra, has submitted a bid for a small design consultancy owned by British Steel called TSP Projects.

The insolvency service said it could not comment because negotiations were continuing.

Source: 

Source: Financial Times