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In a setback for Tata Steel, Sweden-based SSAB has ended talks to buy the former's Netherland business, including Ijmuiden steelworks.

During the fourth quarter of 2020, SSAB announced that it was in discussions with Tata Steel concerning a possible acquisition of the IJmuiden steel mill and related downstream assets.

In a statement on Friday, the Swedish steel major said that after deeper analysis and discussions, it became clear that there were limited possibilities to integrate IJmuiden into the SSAB strategic framework. Discussions with Tata Steel have therefore concluded, it addded.

"We have carefully evaluated Tata Steel IJmuiden and have concluded that an acquisition would be difficult for technical reasons. We cannot be sufficiently certain that we could implement our industrial plan with the preferred technical solutions as quickly as we would wish," said Martin Lindqvist, President and CEO at SSAB.

"We cannot align Tata Steel Ijmuiden with our sustainability strategy in the way desired," he added.

The CEO said that the synergies that SSAB saw in the transaction would not fully justify the costs and investments required for the Swedish major's desired transformation.

He was of the view that the transaction would not meet our financial expectations.

The company said that the the rationale behind the discussions concerning Tata Steel IJmuiden was based on our customers' clear desire for a strong supplier of a broad range of fossil-free steel.

Noting that the transition to fossil-free steel is a top priority for SSAB, Lindqvist said: "We are continuously on the lookout for possibilities to invest and step up the pace of this transition."

The developments comes a setback for the Tatas as, it was looking at deleveraging its highly debt-ladden assets, especially in the overseas market. However, with steel market firming up, fresh opportunities could be explored later, sector experts said.

Post the announcement by SSAB, shares of Tata Steel declined. Around 1 p.m., its shares on the BSE were at Rs 602.25, lower by Rs 21.70 or 3.48 per cent from its previous close.