Tata Steel Terminates Sale Of Southeast Asian Business

Tata Steel Ltd.’s agreement with HBIS Group to divest the former’s stake in its southeast Asian business has been called off due to lack of regulatory approvals.

Tata Steel’s wholly-owned subsidiary TS Global Holdings Pte Ltd. had a definitive agreement with Chinese company HBIS to divest its stake in Tata Steel (Thailand) Public Company Ltd. and NatSteel Holdings Pte Ltd. to a company where 70 percent equity shares were to be held by HBIS and the remaining by the Tata Group subsidiary.

HBIS was unable to procure the requisite approvals from the government in Hebei, a province in China, Tata Steel said in its press release. The lack of approval—one of the key conditions for the proposed transaction—led to both parties deciding to not extend the agreement.

After the announcement, Tata Steel said it will “immediately” start engaging with other investors to find a partner for its southeast Asian business.

The deal, which was signed in January, would have fetched Tata Steel $327 million (Rs 2,325 crore) for a 70 percent stake, according to its earlier filing. The Indian steelmaker’s Chief Executive Officer and Managing Director TV Narendran had said that the business was divested to shift the focus back on the domestic market. The divested stake contributed 7.2 percent to Tata Steel’s consolidated revenue.

As of January-end, the total enterprise value of the southeast Asian business stood at $685 million (Rs 4,871 crore), of which $120-150 million (Rs 853-1,067 crore) would be debt and $535 million (Rs 3,798.5 crore) the equity value.