US-based Flacks Group is assessing a potential takeover of British Steel for a nominal sum of money with the aim of making the steelmaker a profitable company again, the private-equity firm told Argus on Thursday.
The firm argued that the UK government needs a solution after initially stepping in to save the company because the government does not want to own the plant long term. "They are losing too much money there," a source said.
The UK government took control of British Steel on 12 April under emergency powers, citing an urgent need to secure raw materials and keep the blast furnaces running at the company's Scunthorpe site.
"British Steel has challenges, but it is also of critical importance — Britain can't turn the lights out on all its steel plants," Flacks said.
The firm said that if a deal was going to go through, government authorities would have to help with electrification of the plant.
As part of its medium to long-term plan for the plant, Flacks has said it would leverage the expertise of the Acciaierie d'Italia (ADI) management team to help stabilise and modernise British Steel.
Flacks is in negotiations with the Italian government over the potential takeover of ADI. The firm was selected as the winner of the tender for the troubled Italian steelmaker in late December.
Commenting on the specifics of any potential deal to take over British Steel is not possible yet because contact with government officials over such a deal is still not advanced, Flacks said.
The idea of merging Liberty Speciality Stocksbridge with British Steel has been floated in the past, with some government support behind this idea, according to market participants.
