Sweden's SSAB eyes Tata Steel's Europe business as Thyssenkrupp's back-up plan: Bloomberg

Mumbai: Swedish steelmaker SSAB AB is eyeing Tata Steel’s European assets as a back-up plan to a deal with Thyssenkrupp AG amid industry consolidation, said a news report by Bloomberg on Friday.

“SSAB is holding preliminary talks with Tata Steel of India as it seeks merger options,” the report said quoting persons familiar with the matter.

The Swedish company, which has a market value of around $3.2 billion, would gain control of Tata Steel’s European business if they pursued such a deal, the report said.

SSAB is among steelmakers interested in acquiring steel assets from German-based Thyssenkrupp, However, Liberty Steel, founded by Sanjeev Gupta, said recently that it had made a non-binding offer for Thyssenkrupp’s steel unit.

Tata Steel did not wish to comment on this, “These are speculations and we do not wish to comment on this, said a Tata Steel Spokesperson, and added that the company is still in talks with the UK government for support.

Steel producers in Europe are under pressure to consolidate, having been battered by weaker demand and global overcapacity, combined with soaring prices of iron ore and high supply of low-cost imported steel, the Newyork-based news channel said, “As a result, several major producers are speaking to each other about potential mergers,”.

SSAB AB manufactures sheet and plate steel. The Company's main products include hot-rolled, cold-rolled, and organic-coated steel sheet. SSAB’s production plants in Sweden, Finland and the US have an annual steel production capacity of approximately 8.8 million tonnes.

In the beginning of October, there were reports that the Chinese steelmaker, Jingye had expressed an interest in taking over Tata Steel's UK operations.

UK-based television channel, Sky News said that the Jingye Group told Tata's parent company and the government that it is keen to explore a takeover of Britain's largest steel producer.

As per the news channel, the British government had also planned to rope in investment bankers to come up with a rescue plan for Tata Steel. This comes after the Indian parent had earlier indicated that the company will be unable to fund the losses in the UK operations.

Tata Steel, reported a consolidated net loss of Rs 4,609 crore for the June quarter, mainly due to its loss-making Europe operations. Tata Steel Europe's consolidated earnings before interest, tax and depreciation reported a loss of Rs 625 crore.