Mumbai/Kolkata: Tata on Tuesday said it has terminated the definitive agreements to sell its Southeast Asian businesses to China’s Hesteel Group after the Chinese steel major failed to get regulatory approvals from the Hebei government.
This is the second overseas deal of Tata Steel, India’s largest and oldest steel company, which has failed to get clearance from the government and regulatory authorities. Two months ago, Tata Steel Europe’s proposed joint venture with Thyssenkrupp had crashed after it failed to satisfy the European Commission’s concerns on competition in some key markets.
Tata Steel said it will “immediately” start engaging with other investors for the assets it wants to exit as part of its strategy of divesting noncore units, and use proceeds to bring down consolidated net debt that breached the Rs 1 lakh crore mark last year. The stake sale to Hesteel Group (formerly known as HBIS Group) was to bring down debt by about $450 million, Tata Steel CFO Koushik Chatterjee had said.
Tata Steel said in a notification to Bombay Stock Exchange that Tata Steel has been informed by HBIS that they have not been able to procure requisite approvals from Hebei government, one of the key conditions precedents for the transaction. Both parties have, therefore, decided not to extend the definitive agreements. It, however, remained unclear why Hesteel, the fourth largest steel company in the world, was unable to procure the necessary approvals.
Source: Economic Times