SSAB Calls Off Deal To Buy Tata Steel’s Dutch Assets

Swedish steelmaker SSAB AB called off a deal to acquire Dutch assets of Tata Steel Ltd. citing technical hurdles.

After deeper analysis and discussions, it became clear that there were limited possibilities to integrate IJmuiden into the company’s strategic framework, SAAB said in a statement. The synergies in the transaction were not fully justifiable to the costs and investments required for the desired transformation, which meant that the transaction would not meet the financial expectations, it said.

The deal could have added at least Rs 35 per share to their target price for Tata Steel, Amit Dixit, an analyst at Edelweiss Securities, said. With this deal being abandoned, the re-rating potential and the de-leveraging plans take a hit.

Vishal Chandok, an analyst at Emkay Global Financial Services, said though this negative for Tata Steel but the brokerage hasn’t factored any upside from the deal.

22 of 29 analysts tracking Tata Steel have a ‘buy’ rating and suggest a potential upside of nearly 19.5% on Tata Steel.

In October, Bloomberg reported that Swedish steelmaker SSAB was exploring a combination with Tata Steel’s European business as a back-up plan to a deal with ThyssenKrupp AG amid industry consolidation.

Tata Steel stock fell as much as 2.57% in Friday's trade, declining for the third straight session.