JSW Steel surprises by bidding for TATA Steel UK

Tata Steel has short-listed seven bidders for its UK assets; and JSW Steel is one of them. Investors of JSW Steel will be a worried lot due to the additional debts JSW Steel may acquire to buy the loss making assets of Tata Steel in UK. 

JSW Steel has so far been focused in India with a set up capacity of 18 million tonnes of steel making. There is speculation in the market that the company is not a serious bidder as the balance sheet of the company simply does not allow it to acquire an asset of such size in UK.

JSW Steel has been outperforming the sector on bourses while nearing its 52 W high. The stock is up by almost 44 percent on 1 year basis, while the BSE Metal index has been down by almost 23 percent for the similar period. The stock is up by almost 25 percent over a 3 months period while the BSE Metal index is up by 14 percent. JSW Steel has been in acquisition mode recently with its acquisition of two hydro power assets from Jaiprakash Power ventures. 

Tata Steel had acquired it UK assets from Corus Group Plc. for $12.9 billion in 2007 . Its UK operations have been unprofitable; and in a strategic decision, Tata Steel has decided to sell its UK assets. The management is exploring various proposals from bidders which will allow it to exit its UK operations.