Tata Steel is selling its Long Products Europe, the company's long products division, to The Klesch Group. The aim is to complete the transaction in the first half of 2015.
The steelmaker has signed a Memorandum of Understanding with the company and intends to sell its long products division and associated distribution activities.
According to Klesch, the agreement 'covers several UK based assets including the steelworks at Scunthorpe, mills in Teesside and Scotland, an engineering workshop in Workington and a rail consultancy in York, as well as other operations in France and Germany'.
Long Products Europe produces a wide range of standard and differentiated products including sections, rails, wire rods, special profiles and plates for the rail, yellow goods, energy and construction sectors. With approximately 6,500 employees, it currently produces around 3Mt and has the capacity to produce up to 5Mt.
Karl Koehler, chief executive of Tata Steel's European operations said, "We are making huge strides on our strategic journey to become a premium, customer-centred steel company thanks to investment in equipment, technology and customers, together with the substantial contributions from our employees."
Koehler said that a process of due diligence would now be undertaken but added that 'no assurance can be given about the outcome'.
"We will regularly engage with our employees and other stakeholders throughout this process, and we will consult with the trade union representatives and work councils," Koehler said.
The reason behind the planned sale of Tata's Long Products Europe? According to Koehler it is to concentrate resources on strip products where the company has greater cross-European production and technological synergies.
"We want to build a sustainable business in the UK and further develop our mainland Europe business and we are committed to providing the necessary leadership and financial resources to achieve that," Koehler added.
Founded in 1990 and headquartered in Geneva, the Klesch Group is a global industrial commodities business specialising in the production and trading of chemicals, metals and oil. It boasts revenue in excess of €5 billion, and employs more than 2,000 people across 30 locations in over 17 countries. The company claims to specialise in acquisitions based on forecasting their future value.
Tata Steel is Europe's second largest steel producer and part of the Tata Steel group, which has a steel capacity of 29Mt and 80,000 employees.