The Hindu : Business : Corus sells majority stake in Teesside

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Friday, Jan 30, 2009
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Business

Corus sells majority stake in Teesside

Ramnath Subbu

Move follows assets restructuring exercise

Conducting company-wide review of
overheads to cut cost
Other measures include bringing down
work-force by 3,500

MUMBAI: Corus, the European business of Tata Steel and Europe’s second largest steel maker, on Thursday announced that it, along with a four member consortium headed by Marcegaglia SpA and Dongkuk Steel Mill Co Ltd., has signed a memorandum of understanding under which Marcegaglia and Dongkuk would jointly acquire a majority stake in the Corus’ Teesside Cast Products business. Marcegaglia would have the largest equity interest, while Corus would retain a minority holding.

Marcegaglia and Dongkuk are part of a four-member consortium that has a slab offtake agreement with Corus.

Due diligence

Marcegaglia and Dongkuk will now undertake due diligence to finalise the terms of the acquisition agreement soon, a statement from Tata Steel said.

Last week, Corus has announced a series of strategic measures including divestments, asset restructuring and a company-wide efficiency and overhead review to improve its competitive position.

The initiatives include divestments by selling Corus’ aluminium smelters in Germany and the Netherlands and offering a majority stake in Teesside Cast Products.

Corus is conducting a company-wide review of efficiency and overheads to reduce cost by about 20 per cent.

According to Phil Dryden, Divisional Director, Corus Long Products, the proposed change of ownership fits the business plans of all participants and will significantly improve prospects for the further long-term development of steelmaking on Teesside.

Elements of the strategic and structural initiatives comprise long-term plans that have been advanced due to the slowdown and are expected to augment operating profits by more than 200 million pound annually.

The initiatives include measures to bring down the 42,000 strong work-force by around 3,500.

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