UK Ministry of Defence Buys Sheffield Forgemasters
UK’s Ministry of Defence has launched an offer to acquire Sheffield Forgemasters International Limited, allowing HM Government to refinance the company and secure the supply of components for the MOD’s critical existing and future UK defence programmes. The MOD also intends to invest up to GBP 400 million for defence critical plant, equipment and infrastructure into SFIL over the next 10 years to support defence outputs. The immediate cost of the acquisition is GBP 2.56 million for the entire share capital of the Company plus debt assumed. The Ministry of Defence will acquire 100% ownership of Sheffield Forgemasters International Limited, the parent company of the Sheffield Forgemasters Group. There will be no change to the corporate structure of the group and all subsidiary companies, including Sheffield Forgemasters Engineering Ltd and Sheffield Forgemasters Steel Ltd, will remain wholly owned by SFIL. Existing contracts will be honoured. The purchase represents a nationalization of a UK steel asset in an industry that has been in private hands since the 1980s. The investment will secure Sheffield Forgemasters' role as a critical supplier to the next generation of UK defense programs, while continuing independent commercial activities, including exploiting opportunities arising from the government's net zero carbon agenda, in markets like civil nuclear, oil & gas, power generation and renewables including offshore wind and steel processing
The transaction will involve injection of up to GBP 400 million of new investment over the next 10 years into Sheffield Forgemasters' defense-critical assets to modernize its plant and equipment to support its role as a long-term supplier to UK defense, including plans for a new heavy forge line and building, a flood alleviation scheme, major machine tool replacements and a site-wide upgrade, the company said. This is expected to retain and create new highly skilled manufacturing jobs within the Sheffield City region.
The transaction, supported by major shareholders, is subject to a three-week offer period and due to be completed August 19.
UK’s Materials Processing Institute Chief Executive Mr Chris McDonald, has hailed the government’s move to nationalise Sheffield Forgemasters as a major show of support for the UK’s steel and manufacturing sectors. He also welcomed its pledge to invest GBP 400 million in the business over the next decade, which, he says, will also bolster the nation’s steelmaking sector.
Welcoming the news, Unite's assistant general secretary for manufacturing, Steve Turner said "This is the news we've waited two years to hear. Unite has been engaged in a long battle with the Ministry of Defence and the UK government to protect UK steel supply to our defence and nuclear programmes so today’s news will be welcomed with a huge sigh of relief right across our steel communities. It brings to an end years of instability for this historic 215 year-old company, but is also a sign that government is maybe finally waking up to a crisis of its own making. Critical infrastructure industries like steel function better in public hands and advanced economies like our own need to have stable, secure domestic steel production capabilities to protect our national security interests as well as to compete in global markets.
The origins of Sheffield Forgemasters date back to the 1750s as a small blacksmith forge. George Naylor set up the foundations for the business as a commercial operation with the building of the Millsands Steelworks in 1805. His son in law, Edward Vickers, later joined forces with him to form Naylor Vickers and Co. Since then the company has been associated with many famous steel industry names such as English Steel, Firth Brown, British Steel and River Don Castings. It is now capable of producing the largest and most technically challenging cast and forged steel components in the world. It has an on-site steel melt shop with an 105 tonnes electric arc furnace, a steel foundry with steel casting up to 630 tonnes in a single pour and a steel forge steel forge with a 10,000 tonnes press capable of forging up to 300 tonnes and a 4,500 tonnes press capable of forging up to 40 tonnes.