U.K. Plans to Sell British Steel to a Chinese Buyer in Rescue Deal

(Bloomberg) -- China’s Jingye Group Co. entered a deal to acquire British Steel assets, ending months of speculation about the future of the troubled company.

The agreement involves purchasing British Steel’s Scunthorpe plant, plus other assets in the U.K., France and the Netherlands, Jingye said in a statement on Monday. The Chinese company plans to invest 1.2 billion pounds ($1.5 billion) in British Steel over the next decade, but didn’t say how much it was paying for the assets.

The deal is still subject to “a number of matters,” including regulatory approvals, but should be completed “as soon as reasonably practicable,” the U.K. Insolvency Service said Monday.

Britain’s No. 2 steelmaker was put into liquidation in May, just three years after being acquired by private equity firm Greybull Capital LLP for 1 pound. The company has struggled in the face of weak steel demand, surging costs and tough competition from cheaper imports.

Heavy industry in the U.K. has been in decline for decades as manufacturers move overseas to take advantage of cheaper labor costs, but politicians have been vocal about trying to save British Steel. A deal should safeguard thousands of jobs in the northern town of Scunthorpe.

The Sunday Telegraph reported over the weekend that advisers were in the process of finalizing a draft agreement involving a 70 million-pound deal with Jingye. The takeover will be aided by a 300 million-pound package of loans and other support, the newspaper reported.

Turkey’s Oyak Group said earlier today that it had ended talks to acquire the company.

Jingye said it will engage with labor union representatives before the completion of the sale. U.K. labor union Unite said earlier Monday it “cautiously welcomed” news on the deal with Jingye.

--With assistance from Winnie Zhu.

To contact the reporter on this story: Elena Mazneva in London at emazneva@bloomberg.net

To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net, Dylan Griffiths, Liezel Hill

©2019 Bloomberg L.P.