Turnaround investor Michael Flacks is interested in acquiring British Steel and combining it with another ailing steelworks in Italy to create one of the largest metals groups in Europe.
The Manchester-born businessman, whose Flacks Group is focused on buying distressed companies, said he was “very” interested in acquiring British Steel and investing to electrify its production.
“Somebody has to take control of British Steel. It’s a plant of national importance,” he told the FT last week. “I see an amazing opportunity where most people have overlooked this sector. I’m a big, bullish believer.”
Flacks said he was working with investment bankers to prepare a bid. There have been several failed attempts over the past decade to turn the Scunthorpe steelworks into a viable business.
Private equity group Greybull Capital bought the business from India’s Tata Steel in 2016 for just £1, only for the company to collapse in 2019. In March 2020 Chinese steelmaker Jingye saved the plant from closure by buying British Steel from the UK’s official receiver for about £50mn.
But the government seized control of the management of British Steel last year amid fears that Jingye planned to walk away from the business, which was losing £700,000 a day.
The takeover preserved the jobs of 3,500 workers but has left the taxpayer footing the bill for the lossmaking company, with the government paying hundreds of millions of pounds to keep it running.
Flacks’ interest comes after the FT reported in November that the UK government was sounding out bankers about a possible sale of the steelworks.
The process remains at an early stage. Any acquisition of British Steel would be complex and require government backing, while Jingye would be expected to demand compensation that could top £1bn, the FT previously reported.
Europe’s struggling steel industry has been hit by US President Donald Trump’s tariffs, high energy costs and a global glut of the metal that has driven down prices.
Flacks, whose net worth is about £1.7bn, according to the Sunday Times Rich List, is also closing in on a deal for the Italian steelworks previously known as Ilva.
He wants to combine the Italian steelworks with British Steel to capitalise on what he sees as a shift in the market, with European governments and companies placing more emphasis on local suppliers.
“My vision is we’re going to do a roll-up of European steel operations,” Flacks said. “There’s going to be an infrastructure growth. People are going to be more receptive to working with British Steel because it won’t be in Chinese hands.”
Flacks said he was working to line up €5bn of public and bank financing for cleaning up and turning around the Italian steelworks, which has long been blighted by severe environmental problems.
Miami-based Flacks Group owns industrial businesses including Pleuger, a supplier to the water industry, and Aldrich, which makes pumps used in steel production.
But Flacks is perhaps best known in the UK for his failed £20mn approach for home furnishings business Laura Ashley in 2019. He had also explored a takeover of discount chain Poundworld, but a deal never materialised. Both retailers subsequently filed for administration.
Flacks has explored deals for other British assets such as a stake in north-east England’s Teesside International Airport. While that deal has not proceeded, he has acquired a 500-acre site next to the airport with a goal of developing it for renewable energy production and other uses.
Any deal for British Steel would require government support, Flacks said, and that he would be a long-term owner of the assets.
“Every deal I do is complicated,” he said. “We’re not private equity, we’re not a listed company, we don’t have shareholders to answer to. We’re in it for the long game.”
Representatives for British Steel and the UK government declined to comment.
