Six bid for French rail producer Hayange - sources

New York — Six bids have been received for the purchase of French rail producer Hayange, which was formerly part of the British Steel group, sources told S&P Global Platts June 29.

According to reliable sources with knowledge of the matter, the bidders for Hayange include the world's largest steelmaker ArcelorMittal, UK-based industrial group Liberty House, French special steel producer Ascoval through its holding company Greybull Capital, German steel producer Saarstahl, India-based producer Jindal via its Italian rail unit producer JSW Piombino and Hayange's former owner, British Steel.

Chinese steelmaking group Jingye purchased British Steel's UK and Netherlands assets earlier this year after the UK-based steelmaker went into liquidation in May 2019: however Hayange was not included in this transaction.

The companies interested in Hayange presented their offers together with business plans on June 29 to the Social and Economic Committee (CSE) of France Rail Industry in Hayange, the sources said. Union committees will have around ten days to put their feedback in writing and then the companies will have to send their final offers by around mid-July, they said.

According to a source close to the matter, all six companies have submitted their offers independently. However, there is said to be the possibility that British Steel or Liberty could make a final offer jointly with Ascoval. Market sources say Hayange could have good synergies with all of the six bidders.

Arcelor Mittal and Saarstahl both confirmed they are interested bidders. The other four companies understood to be interested declined to comment or did not immediately answer Platts ' requests for information on this matter.

"ArcelorMittal today presented its offer for Hayange, confirming its interest in buying the company... ArcelorMittal would bring to the acquired entity its extensive experience in the rail industry, as well as a solid R&D capacity in rail manufacturing: the company has a dedicated rail R&D facility. The company's experience, together with its R&D capabilities, enables the optimization of processes and the acceleration of the development of new products and services through close exchanges between specialized sites and through the networking of skills and best practices. Having France Rail Industry as part of the ArcelorMittal group would also benefit the upstream and downstream activities of ArcelorMittal Europe - Long Products, the division to which the company's rail-producing plants belong," the company stated, underlying how the acquisition would complement ArcelorMittal's existing assets in the steel rail sector in Europe, a market where the group is already present with one plant in Spain, one in Luxembourg and two in Poland, supplying key rail markets including high speed, metro, heavy haul, urban transport and port operations.

Blooms supply orders

"All of France Rail Industry's permanent employees would become ArcelorMittal employees, with the entity becoming part of ArcelorMittal Europe - Long Products," ArcelorMittal said. "This would allow employees of France Rail Industry to develop within an entity specializing in rails, while also offering prospects for future career development within a larger company. The company would also maintain its contractual commitments – a bloom supply contract - to Ascoval."

Ascoval - as already reported by Platts - is a client of Hayange: it recently won an order to supply 140,000 mt of blooms to Hayange for the manufacture of rails for French rail state-owned railway operator SNCF. The order will become effective from September 2020 and last for four years. Ascoval was taken over by Olympus Steel, the former owner of British Steel, before the latter company entered liquidation last year.

Liberty is focused on growth and for the time being does not produce rails so a teaming up with Ascoval could bring it into a new product area at the same time allowing it to expand.

Out of all the bids, sources with knowledge of the matter said that the French government may favor an acquisition by Ascoval as it wants to have "Ascoval and Hayange on the same boat". This could be achieved through an acquisition of Hayange by Greybull, or an acquisition of Hayange by one of the other companies and simultaneously the acquisition by that company of Greybull's shares in Ascoval. The source said that Greybull has had discussions on this matter with Liberty and British Steel.

As reported, the French government put Hayange up for sale last year separately as it considered it a strategic asset. Following its acquisition of British Steel in March, Jingye is now understood to want to bring Hayange back into British Steel, because the French mill is profitable and it has good synergies with the UK based group.

Hayange produces between 250,000 and 300,000 mt of rails a year, most of them for SNCF.

Saarstahl has a continuous cast blooming line in Völklingen which could supply Hayange and it is located very close to the French mill. The German company confirmed its interest in Hayange but declined to give further details.

JSW Group produces blooms for rails in India and also produces rails in its steel plant in Italy in Piombino.