The unit, which has activities mostly in Britain but also in China, employs 1,700 people and produces specialised steel for the aerospace and automotive industries, as well as the oil and gas sector.
However, Tata Steel gave no update on the future of the rest of its UK assets -- including Britain's biggest steel plant at Port Talbot in Wales.
Earlier this year, Tata Steel decided to offload its loss-making British assets, blaming the move on a global oversupply of steel, cheap imports into Europe from countries including China, high costs and currency volatility.
"Tata Steel UK today announced the signing of a letter of intent with Liberty House Group to enter into exclusive negotiations for the potential sale of its speciality steels business for an enterprise value of £100 million ($125 million, 118 million euros)," it said in a statement on Monday.
The activities comprise several assets in South Yorkshire in northern England, including an electric arc steelworks in Rotherham, a steel purifying facility in Stocksbridge and a mill in Brinsworth.
The business also includes service centres in Bolton, in the north west, and Wednesbury in central England, as well as two facilities in the Chinese cities of Suzhou and Xi'an.
?Today's announcement is in line with the overall restructuring strategy of the UK portfolio," said Bimlendra Jha, chief executive of Tata Steel UK.
"This is an important step forward in seeking a future for speciality steels and we have reached this stage thanks to the efforts of employees, trade unions and management."
Tata Steel in May sold its loss-making European long products division to investment firm Greybull Capital, who renamed it British Steel.