Tata Steel and German firm Thyssenkrupp have agreed a merger deal that will create the second biggest steelmaker in Europe.
Thyssenkrupp’s executive board approved the plans for “a 50-50 joint venture” to combine the European steel businesses of Thyssenkrupp and Tata Steel.
Known as Thyssenkrupp Tata Steel, the merged firm will be based in the Netherlands and will be second only to ArcelorMittal in the European steel industry.
It will have a total workforce of 48,000 employees spread across 34 sites, producing about 21 million tons of steel a year with revenues of around €15bn.
Bosses hope the tie-up, which took more than two years to negotiate, will create between €400 and €500m (£354m-£443m) each year in savings.
Tata Steel owns Britain’s largest steelworks plant at Port Talbot in South Wales, which employs 4,000 people.
The firm said it had made a specific commitment that its ambition is not to have any compulsory redundancies in the UK as a result of the joint venture.
Image: The ThyssenKrupp headquarters in Essen, Germany
Final signatures on the deal will follow “shortly”, while competition authorities in the European Union and other jurisdictions must still give the go-ahead.
Welcoming the move, Roy Rickhuss, general secretary of the Community union, said there will now be “significant” investment across Tata Steel’s UK business.
He added: “With a commitment to avoid compulsory redundancies until October 2026, and the first £200 million of any operating profit being invested back in the business, this joint venture has the potential to safeguards jobs and steel-making for a generation.
“However, this joint venture will only succeed if the necessary strategic investments are made to allow the business to thrive.”
Tata Steel chairman Natarajan Chandrasekaran said: “The joint venture will create a strong pan-European steel company that is structurally robust and competitive.
“This is a significant milestone for Tata Steel and we remain fully committed to the long-term interest of the joint venture company.”
Dr Heinrich Hiesinger, chief executive of Thyssenkrupp, said : “We will create a highly competitive European steel player based on a strong industrial logic and strategic rationale.
“We will secure jobs and contribute to maintaining value chains in European core industries.”
Tata Steel hit the headlines last year when it put its entire UK operations up for sale amid a deteriorating industry environment.
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But the Indian-owned firm paused its plans after pledges of government support and an agreement to restructure its hefty pension scheme.
In February, the company’s British employees voted to accept proposals to close the existing pension scheme to new contributions, in exchange for greater certainty about the future of its workforce.