China’s Jingye Group set to acquire British Steell

According to Reuters, China’s Jingye Group said on Monday (11.11.2019) that it had reached a tentative deal to buy British Steel. The Chinese promise to invest 1.2 billion pounds ($1.5 billion) over the next decade. Which will save thousands of jobs.

This agreement has major political significance, as the UK prepares to elect a new government on December 12. The lack of opportunities in the north of England, where British Steel is located, is an electoral problem. Because the social difference between north and south is deepening.

The deal has not yet been finalised, but Business Minister Andrea Leadsom said she was optimistic.

Jingye Group Chairman Li Ganpo said the ambition was to create a world-class group.

We believe that this combination will create a strong, profitable and sustainable business. Which will ensure the long-term future of thousands of jobs. At the same time producing innovative high-quality steel products that the world needs,” he said in a statement.

The value of the transaction has not been disclosed, but amounts between £50 million and £70 million are being floated.

British Steel was put into compulsory liquidation in May. After Greybull Capital, which bought it for one pound from Tata Steel (TISC. NS) in 2016, failed to secure funding to continue its operations.

Its closure would have a negative impact on 5,000 jobs in Scunthorpe. And another 20,000 jobs in the supply chain.

China’s Jingye Group in the European Market

This transaction would give Jingye access to Europe’s large infrastructure market.

Jingye, which also operates in the hotel and real estate sectors, has 23,500 employees and total assets of 39 billion yuan ($5.5 billion).

Article source: https://www.reuters.com/article/us-britishsteel-m-a-jingye/chinas-jingye-group-in-talks-to-buy-british-steel-idUSKBN1XL0Q5