Tata Steel has laid aside plans to sell its Building Systems unit, which makes cladding and insulation panels, two sources close to the matter stated, citing uncertainty within the trade that was aggravated by the coronavirus disaster.
Tata Steel late last year hired French investment bank Credit Agricole to assist find a purchaser for the business working in Britain, Norway, and Sweden, which banking sources value at less than $500 million.
“Like any company, we continue to review our portfolio of businesses to ensure they are sustainable over the longer term,” a Tata Steel spokesperson instructed Reuters when requested concerning the sales plan.
Credit Agricole didn’t instantly reply to a request for comment.
In 2019, Europe’s second-largest steel producer Tata Steel Europe introduced a major overhaul of its British and Dutch activities, at the cost of around 3,000 jobs, as the steel sector grappled with the consequences of overcapacity, cheap Chinese imports and U.S. trade tariffs.
Speaking on the condition of anonymity, the sources told Reuters Tata Steel put its sales effort on hold in March because the COVID-19 pandemic sapped demand further.
Wide sections of industry, together with automakers and construction that are the steel industry’s main clients, shut throughout lockdowns to curb the coronavirus.
With an uncertain outlook in many end markets, companies facing financing pressures and with expensive non-core divisions will need to simplify their portfolio to focus on their core actions, stated Tristan Nagler, UK managing director of Aurelius, which buys businesses that have been carved out of big corporates.
Global steel demand is predicted to fall 6.4% this year because of the virus’s impact on industrial and construction activity, the World Steel Association stated.