The Chinese takeover of embattled British Steel is hanging in the balance after the French government said it would oppose the deal.
According to Sky News, French finance minister Bruno Le Maire last week told his counterpart Sajid Javid that it would veto Jingye’s £50m takeover of the UK’s second largest steel manufacturer.
A source said that the message came with the blessing of French president Emmanuel Macron.
The French government has a say in the takeover decision because British Steel owns a plant in Hayange in northern France that supplies rail to French state railway company SNCF, and is designated a strategic national asset.
In December it was revealed that the Hayange plant, which is one of the most profitable parts of the business, had been put up for sale separately to the rest of British Steel’s assets, with the blessing of the French government.
A source close to Jingye told City A.M. that negotiations with the French government were proceeding as planned and that a decision would be made next month.
British Steel fell into insolvency last year and has been funded since then by the Official Receiver.
Jingye’s offer, which was accepted in November, came after talks with Turkish company Ataer broke down because of what one source called “difficulties” with the Turkish government.
Ataer is the investment arm of Turkey’s military pension fund, and has strong links to President Recyep Ergodan’s regime.
It had been hoped that Jingye’s deal would save up to 4,000 jobs, but it was recently announced that around 400 jobs could be cut under the new ownership.
In recent days another firm has expressed its interest in the business. Earlier this week Turkish conglomerate Cengiz Holdings was said to be in discussion with officials over a backup bid.
A statement from the industrial corporation’s chief executive Omer Mafa confirmed that Cengiz is ready to buy the “whole of British Steel should the current talks with Jingye Group fall away”.
He added that “Cengiz Holding enjoys a strong trading relationship with French industries such as energy, mining and aviation”.
Jingye has until the end of February to finalise the deal, and Whitehall remains confident it can do so.
However, today’s revelation, coming just as the UK leaves the EU, could be a sign that business relations between the UK and its nearest neighbours could be more challenging than had been previously hoped.
A spokesperson for the Department for Business, Energy and Industrial Strategy said: “The Official Receiver is responsible for running an independent sale process. Like any sale of this nature, there are a number of regulatory steps that need to be taken over the coming weeks before the sale can complete.
“The deal with Jingye is very much on track and we expect that the transaction will complete in the coming weeks.”