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Tata Sponge Iron Limited (TSIL) is planning to enter the steel business with the acquisition of Usha Martin Ltd, as Tata Steel on 24/10/2018 announced that its subsidiary Tata Sponge Iron will acquire the steel business of Usha Martin Ltd (UML) for Rs. 4,300-4,700 crores.
Whereas TSIL said in a regulatory filing, “TSIL has been evaluating various strategic options beyond the manufacturing of sponge iron, to enhance its product portfolio and has identified an entry into steel manufacturing in long products as a route to ensure sustainable long-term value creation for all its stakeholders”.
TSIL also said, “It is proposed that the steel business of UML will be acquired subject to transaction closing, for a cash consideration of between Rs 4,300-4,700 crore (subject to various transaction adjustments)”.
Tata Steel said in a regulatory filing, “we hereby inform you that, Tata Sponge Iron will now carry out the Acquisition. Consequently, definitive agreements signed between Tata Steel and UML in relation to the Acquisition shall be adapted accordingly.”
In the previous month, Tata Group made an announcement that the execution of definitive agreements for the acquisition of the steel business of UML through a slump sale is going on a concern basis.
According to the statement, the closing of the acquisition remains subject to execution of definitive agreements between Tata Sponge and UML and fulfilment of various conditions, including regulatory approvals required for the transfer of the steel business.
Earlier in May, Bamnipal Steel Ltd, a wholly-owned subsidiary of Tata Steel, had acquired a controlling stake of 72.65 per cent in Bhushan Steel Ltd (BSL). Tata Steel had won the bid to acquire debt-laden BSL in an insolvency auction.
