Oyak Group’s acquisition of British Steel depends on lowering the cost of contracts the UK’s number two steelmaker holds with its suppliers, reported Bloomberg.
The firm entered exclusive talks in August 2019 to acquire British Steel, the first step in a rescue that could save about 5,000 jobs in the UK’s manufacturing heartland. The due diligence undertaken by Oyak’s Ataer Holding unit over the past two months found that some supply deals were uncompetitive and wants them to be revised.
British Steel was put into liquidation in May 2019, just three years after being acquired by private equity firm Greybull Capital for GBP 1.
The UK steel industry has long struggled to be profitable in the face of high energy and labour costs. British Steel was also hit by the fallout from Brexit, with some European customers concerned about possible tariffs on their orders. Additionally, the weak pound made importing ingredients, such as iron ore, more expensive.
The UK’s Insolvency Service said Oyak, which co-owns steelmakers in Turkey, was the preferred buyer after making an acceptable offer.