3 Oct 2016: Tata Steel update
7 months on from Tata's announcement that it wanted a quick sale of its UK operations (see here) a deal has yet to emerge.  This is likely to be due in part to the price of steel which has been rising and apparently reduced pressure on Tata to sell.

In May, up to 7 bidders were reported to be in the running.  However in July the sale process seemed to be on hold with focus on just one bidder, German rival ThyssenKrupp, which was exploring a merger of its European steel operations with Tata.  In the UK there are concerns that such a merger might not save the UK operations and in particular the key UK steel-making plant in Port Talbot.

The Government has been trying to support a sale by offering hundreds of millions of pounds of loans and potentially taking a 25% stake in the business.  It has been trying to lower the pension deficit (now around £700m) by consulting on special legislation to reduce benefits for the 130,000 members.  This appears unlikely to move forward however due to concerns in Parliament about setting a precedent. 

Until a firm deal emerges there is ongoing uncertainty for employees of Tata Steel in the UK and for the pension scheme.

Argyll comment:  at the moment there is little visibility over a deal.  A tie-up with ThyssenKrupp may do little to help the UK pension scheme.  There are however bidders who have expressed an interest in the UK business including the pension scheme, such as management buyout entity Excalibur, chaired by a Tata Steel UK exec.  Such a deal might do more to offer a long term covenant to the scheme


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