LONDON (Reuters) - Tata Steel has laid aside plans to sell its Building Systems unit, which makes cladding and insulation panels, two sources close to the matter said, citing uncertainty in the industry that was aggravated by the coronavirus crisis.
Tata Steel late last year hired French investment bank Credit Agricole to help find a buyer for the business operating in Britain, Norway and Sweden, which banking sources value at less than $500 million.
“Like any company, we continue to review our portfolio of businesses to ensure they are sustainable over the longer term,” a Tata Steel spokesperson told Reuters when asked about the sales plan.
Credit Agricole did not immediately respond to a request for comment.
In 2019, Europe’s second largest steel producer Tata Steel Europe announced a major overhaul of its British and Dutch activities, at the cost of around 3,000 jobs, as the steel sector grappled with the effects of overcapacity, cheap Chinese imports and U.S. trade tariffs.
Speaking on condition of anonymity, the sources told Reuters Tata Steel put its sales effort on hold in March as the COVID-19 pandemic sapped demand further.
Wide sections of industry, including automakers and construction that are the steel industry’s main clients, shut during lockdowns to curb the coronavirus.
With an uncertain outlook in many end markets, companies facing financing pressures and with costly non-core divisions will need to simplify their portfolio to focus on their core activities, said Tristan Nagler, UK managing director of Aurelius, which buys businesses that have been carved out of big corporates.
Global steel demand is expected to fall 6.4% this year because of the virus’s impact on industrial and construction activity, the World Steel Association said.
Reporting by Clara Denina; additional reporting by Eric Onsted in London; editing by Barbara Lewis