NEW DELHI: Indian steel major Tata Steel is all set to make a Rs 4,700 crore acquisition, with the firm announcing on Saturday that it has signed agreements to take over the steel unit of Usha Martin Ltd (UML).
Usha Martin is amongst the largest wire rope manufacturers in the world and a leading speciality steel producer in India. According to Tata Steel, UML’s steel business comprises the specialised 1 million tonnes per annum (mtpa) alloy-based manufacturing capacity in long products segment based in Jamshedpur, a producing iron-ore mine, a coal mine under development and captive power plants.
While UML, in a stock exchange filing, stated that the sale of its steel business to Tata Steel will help the company in “significant reduction” of its debt, Tata Steel said that the deal is being made on a going concern basis.
“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),” the Tata Group firm said.
Both companies have signed definitive agreements to implement the sale, it added. The closing of the acquisition, however, is subject to fulfilment of various conditions under the agreements.
“At the closing, Tata Steel or any of its subsidiaries or affiliates may carry out this acquisition. The parties shall jointly work towards fulfilment of conditions precedent which are largely regulatory approvals required for the transfer of the business undertaking. All the employees pertaining to the steel business will transfer as part of the acquisition,” Tata Steel said.
The deal is an advantageous one for the Tata firm, which has been on the lookout for likely acquisitions. In May, it won the bid to acquire debt-laden Bhushan Steel Ltd in an insolvency auction, after which Bamnipal Steel Ltd, a wholly-owned subsidiary of Tata Steel, bought controlling stake of 72.65 per cent in BSL.
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■ In May, Tata Steel won the bid to acquire debt-laden Bhushan Steel Ltd in an insolvency auction, after which Bamnipal Steel Ltd, a wholly-owned subsidiary of Tata Steel, acquired the controlling stake of 72.65%.
■ Tata Steel Group is among the top global steel firms with an annual crude steel capacity of 27.5 mtpa.