British Steel: Rival bidder on standby if Jingye sale fails

January 26, 2020 by No Comments


British Steel Scunthorpe siteImage copyright

Image caption

The bulk of British Steel’s 4,000 staff work at the Scunthorpe plant

Turkish industrial giant Cengiz says it is ready to bid for British Steel if a planned sale to Jingye falls through.

“We are watching developments closely and are ready to make a bid for the whole of British Steel,” Cengiz said.

China’s Jingye has offered £50m for the ailing UK steel business, with a deal due to be completed in the coming weeks which would save about 4,000 jobs.

But Cengiz’s decision to go public comes amid speculation about job cuts and the future of a Jingye rescue.

Cengiz’s interests include mining, construction, power generation, tourism, and railways. Its founder and owner, Mehmet Cengiz, is a close ally of Turkey’s President Recep Tayyip Erdogan.

In a statement, Cengiz said: “With a strong balance sheet and annual revenues of $7bn we are well placed to acquire overseas assets.

“The UK is one of our target countries that we want to invest in and are looking at a range of opportunities such as major infrastructure projects and industrial assets. British Steel is an important asset.”

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A company source told the BBC that Cengiz has “made it clear to the government that it has the money, experience and credibility” to acquire British Steel.

The Department for Business, Energy and Industrial Strategy would not comment specifically about any Cengiz talks.

But a spokesman said: “The government believes the Jingye transaction will complete in the coming weeks.

“Officials have met and continue to meet all parties interested in acquiring British Steel, as the government is not bound by the exclusivity agreement signed by the bidder and the official receiver.”

Union backing

British Steel has been kept running by the government via the Official Receiver since May, when the company went into liquidation.

Last week, the Jingye rescue won the backing of unions, an important step in clearing opposition to a sale.

However, unions warned the takeover could involve cutting around 10% of the company’s workforce. Jingye has promised to invest about £1.2bn in the business.

Alasdair McDiarmid, operations director for the Community union, said last week: “Faced with challenging circumstances we believe that the dialogue between Jingye and the unions has produced a better deal for employees than what was otherwise on the table.

“We look forward to working with everyone to securing the future of British Steel under Jingye’s ownership.”

Jingye could not be reached for comment.