After going into compulsory liquidation and having gone through a number of failed acquisition attempts, European steel products firm British Steel has once again been opened to bidders. In the running to take over the company is the China-based conglomerate Jingye Group.
Jingye Group, which has active participation in various industries including stakes in companies in the chemical, real estate, and hospitality sectors, was part of the original bidding process when the company was first put up for sale in May.
During that time, British Steel was put into compulsory liquidation after failed attempts at getting the government to bail it out. Since its insolvency, the British government has been keeping the company's lights on, at least until a sale is finalized. This has been done to temporarily secure the around 5,000 jobs at the firm's facility in Scunthorpe.
The first company to have come close to acquiring British Steel was the subsidiary of Turkey's state military pension fund Ataer. The company, which owns a 50 percent stake in its home country's largest steel producer Erdemir, made an offer to acquire British steel earlier in the year. Negotiations went on for months but later broke down in late October after both parties failed to reach an agreement.
With Ataer now out of the race, Jingye is taking the opportunity to come up with a deal that will be acceptable for both parties. According to reports citing sources close to the matter, Jingye is looking to reach a preliminary agreement with British Steel by the weekend.
Representatives of the Chinese firm, including its chairman Li Ganpo, had reportedly met with members of parliament to discuss its planned acquisition. Jingye reportedly reassured the British government that it will be looking after the future of the company should its bid become successful.
The MP for the nearby Brigg and Goole constituency, Andrew Percy, had told reporters that Jingye apparently intends to make substantial investments to expand the production of British Steel to better meet the demands of the European market. For its part, the British government is apparently willing to work together with the Chinese firm to support it in its goals.
Sources close to the negotiations revealed that Jingye plans to increase the production volume of British Steel's Scunthorpe plant from 2.5 million tons to 3 million tons of steep per year. It plans to achieve this by improving the facility's efficiency and to find ways to cut costs.
Jingye's acquisition of the company is expected to still take weeks if its bid is successful. There still needs to be a lot of legal requirements to be met, all of which will likely take several weeks to be completed.
