Source: Global Times Published: 2019-12-18
Chinese private enterprise Jingye Group's bid to acquire the bankrupt British Steel is still in progress and the two parties have been discussing details of the transaction, a source familiar with the deal told the Global Times on Wednesday.
The comment came after British media reports over the weekend said that the deal, which was allegedly valued at 70 million pounds ($91.64 million) and could save more than 4,000 jobs, was close to breaking down.
Talks with the potential buyer Jingye were at risk as a deadline to finalize the terms approached, The Telegraph reported, citing Whitehall sources.
"It's all market and media speculation. Actually, the two parties have always been discussing the deal and going through procedures," the source said on condition of anonymity.
The two companies have signed a framework agreement, not an official one. But they've got into the details, the source added.
"Following the agreement signed on November 10, Jingye and the relevant authorities continue to make progress in securing the necessary approvals to complete the transaction and remain confident that these will be achieved in the New Year," said a spokesperson, according to a report by The Guardian on Sunday.
"Any suggestion to the contrary is completely incorrect," the spokesperson added.
Jingye Group, based in North China's Hebei Province, entered the deal to acquire British Steel assets in November.
A sales contract has been entered into with Jingye to acquire the business and assets of British Steel, including the steelworks at Scunthorpe, UK mills, and shares of its subsidiaries, citing the Official Receiver and special managers from Ernst & Young managing the deal, according to the website of the UK government.
British Steel, the second-biggest steel group in the UK, declared bankruptcy in May after being denied government aid.
The Chinese company plans to invest 1.2 billion pounds in British Steel over the next decade, according to Bloomberg.
Speculation mounted after the deal was revealed in terms of what would motivate a buyer for a sunset industry in the UK, with market demand for steel slumping.
Bian Yongzu, a research fellow at the Chongyang Institute for Financial Studies, the Renmin University of China, told the Global Times on Wednesday that it is not likely that the Chinese company is seeking high technology, brand or market share from this deal, since the Chinese steel industry is a global leader.
"It is more likely that Jingye sees this as an opportunity to bolster its international influence," Bian said, adding that it is an inevitable trend that Chinese private companies, which are willing and able to take risks, are going global.
Bian Yongzu is a research fellow of the Chongyang Institute for Financial Studies at Renmin University of China.