How Excalibur and Liberty could join forces

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As the deadline for bids for Tata's UK steel business ticked by this lunchtime, it seems there is potential for two of the bidders to work together.

Excalibur Steel is the name of the management buy-out bid. It was thought to involve keeping the blast furnaces open for the production of new steel and was favoured by unions. It was based on the original turnaround plan submitted to - and rejected by - the board of Tata in March.

The Liberty House bid was submitted by Indian businessman Sanjeev Gupta who has already snapped up some of Tata's assets. His plan involved recycling existing steel in less costly and labour-intensive Arc furnaces rather than producing brand new steel.

These two bids have been submitted separately and seem incompatible but it emerges there is a potential compromise position in which Excalibur would work with Liberty on a plan that would see one of the blast furnaces continue operating for an unspecified time, while simultaneously introducing Arc furnaces alongside.

Crucial board meeting

In a potential tie-up, Excalibur would bring valuable management know how in the shape of Stuart Willkie, the man who ran Tata's strip products business until taking a recent leave of absence to mount the Excalibur bid.

A combined bid is thought to be popular with the government which has offered hundreds of millions in debt financing and an offer to take a stake of up to 25% in the company that wins.

Other names reported to be interested are: private equity group Greybull Capital, which recently bought Tata's Scunthorpe steel plant; Chinese producer Hebei Iron and Steel; Leeds-based private equity fund Endless; JSW, India's second largest steel producer; and NUCOR, the largest steel-maker in the US.

The bids will be submitted to a Tata board meeting in Mumbai on Wednesday and the Business Secretary Sajid Javid will be going along in a show of government support.

He was severely criticised for being in Australia at the time of the crucial board meeting in March when Tata put its UK business up for sale.

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