Tata Steel may opt for closing down operations at its plants in the U.K. in about six weeks if the company does not find a buyer soon. Tata Steel is reportedly in talks with Thyssenkrupp of Germany to merge its European steel operations, Press Trust of India reported.
In the next few days, the company will hire bankers to run through its sale process. However, the company has privately given up hopes of finding a buyer, PTI reported, citing a Financial Times article.
"Tata Steel could mothball plants in as little as six weeks. They have to go through the motions. But if they have not found a buyer by the next board meeting at the end of April, they will close it and they are not expecting anyone to come forward now," PTI quoted a person as saying.
Last Week, the company announced it put its entire U.K. business up for sale.
However, post its exit from the U.K., Tata Steel may merge its European business with Thyssenkrupp to create a joint venture, which could be Europe's second largest steel company after ArcelorMittal, Reuters reported.
Tata Steel acquired Corus in 2007. However, soon after the acquisition, a global economic slowdown and muted demand in European and other markets adversely affected the company's sales. The company – battling a loss-making unit – said in January it would lay off 750 workers of its Port Talbont Steel plant in Wales.
Meanwhile, according to some analysts in Germany, a merger would be beneficial for both Tata Steel and Thyssen's steel to sell any joint entity shares in an initial public offering (IPO) because that could result in some form of financial returns for both the companies.
"For Tata Steel, in particular, an IPO would partly reward the company after the massive write-down of the UK asset's book value," Reuters cited an analyst's note to its clients as saying.
According to a report by the Mint, Greybull Capital LLP may be interested in buying Tata Steel's U.K. plant in Scunthrope, using funding from private sector sources.