Tata Steel to acquire steel business of Usha Martin for up to Rs 4,700 crore
MUMBAI: Tata Steel has signed a definitive agreement to take over the specialty steel business of Kolkata-based steel and wire rope maker Usha Martin for a cash consideration between Rs 4,300 crore and Rs 4,700 crore, the company informed the Bombay Stock Exchange on Saturday.
The transaction, which is Tata Steel's first major acquisition outside the NCLT process where it bagged Bhushan Steel earlier this year, involves Usha Martin's one million tonne specialty steel plant in Jamshedpur that makes alloy based long products. The facility at Jamshedpur also comprises a functional iron ore mine, a coal mine under development and captive power plants.
In a separate statement Usha Martin said, "all the employees pertaining to the steel business will be transferred as part of the divestment and the sale proceeds will be applied first to repay existing lenders of Usha Martin."
The deal, which is estimated to get completed in the next 6-9 months will help Tata Steel build capacity in long and value added products used particularly in the automotive segment. It will also help Usha Martin clear debt worth over Rs 3,700 crore.
"The company may acquire the asset itself or use any of its subsidiaries to acquire it at the time of closing,"a Tata Steel statement said.
ET had first reported in June that Tata Steel has shown interest in buying the asset along with JSW Steel, Liberty Group and Kalyani Steel after reporting in May that the asset was being put on the block by the company. Vedanta had also shown preliminary interest.
This is another asset for which Tata Steel has trumped rival JSW Steel which was also keenly pursuing it to enhance its presence in the east. It had earlier defeated the Sajjan Jindal-led steelmaker in succeeding to acquire Bhushan Steel and putting in a higher bid for Bhushan Power and Steel.
"Tata Steel Limited hereby announces that it has executed definitive agreements for acquisition of the steel business of Usha Martin Limited through a slump sale on a going concern basis," the company said in a release.
Usha Martin's steel business had reported a revenue of Rs 3,441 crore in the last fiscal year.
The transaction, which is Tata Steel's first major acquisition outside the NCLT process where it bagged Bhushan Steel earlier this year, involves Usha Martin's one million tonne specialty steel plant in Jamshedpur that makes alloy based long products. The facility at Jamshedpur also comprises a functional iron ore mine, a coal mine under development and captive power plants.
In a separate statement Usha Martin said, "all the employees pertaining to the steel business will be transferred as part of the divestment and the sale proceeds will be applied first to repay existing lenders of Usha Martin."
The deal, which is estimated to get completed in the next 6-9 months will help Tata Steel build capacity in long and value added products used particularly in the automotive segment. It will also help Usha Martin clear debt worth over Rs 3,700 crore.
"The company may acquire the asset itself or use any of its subsidiaries to acquire it at the time of closing,"a Tata Steel statement said.
ET had first reported in June that Tata Steel has shown interest in buying the asset along with JSW Steel, Liberty Group and Kalyani Steel after reporting in May that the asset was being put on the block by the company. Vedanta had also shown preliminary interest.
This is another asset for which Tata Steel has trumped rival JSW Steel which was also keenly pursuing it to enhance its presence in the east. It had earlier defeated the Sajjan Jindal-led steelmaker in succeeding to acquire Bhushan Steel and putting in a higher bid for Bhushan Power and Steel.
"Tata Steel Limited hereby announces that it has executed definitive agreements for acquisition of the steel business of Usha Martin Limited through a slump sale on a going concern basis," the company said in a release.
Usha Martin's steel business had reported a revenue of Rs 3,441 crore in the last fiscal year.
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