Tata Steel and Thyssenkrupp have agreed a merger that will create Europe’s second-biggest steelmaker.
The deal will mean Indian-owned Tata Steel’s UK plants are merged into a pan-European venture with annual sales of about £13bn.
These include the UK’s biggest steelworks at Port Talbot in Wales, which employs 4,000 people.
Tata said its “ambition” was to not have any compulsory redundancies in the UK as part of the joint venture.
German-owned Thyssenkrupp’s supervisory board gave the go-ahead to the merger on Friday – the two companies have been in negotiations for more than a year.
Between them, they employ about 48,000 workers.
The merged group anticipates it will make costs savings of between £350m to £440m a year.
Natarajan Chandrasekaran, chairman of Tata Steel, said: “This is a significant milestone for Tata Steel and we remain fully committed to the long-term interest of the joint venture company.
“We are confident that this company will create value for all stakeholders.”
When details of an initial agreement emerged last September, both sides said they expected about 4,000 jobs would go as a result of the merger, half from administration and half from production.
In Wales, where almost 7,000 people are employed by Tata, unions hope the deal will bring an end to uncertainty for workers.
Roy Rickhuss, general secretary of Community – the steelworkers’ union – welcomed the announcement, saying it would have “the potential to safeguard jobs and steel-making for a generation”.
But he said the venture would only succeed if there was strategic investment to make sure the business thrived.
Tata announced in 2016 that it wanted to sell off its entire UK operations – before scrapping plans and optioning for a merger deal.
Thyssenkrupp chief executive Heinrich Hiesinger has previously said the two companies needed to consolidate and become more efficient because of increasing pressure from imports and an overcapacity within the industry.
More recently, European steel makers have faced 25% tariffs on exports to their biggest market, the US.
“The joint venture with Tata Steel is an important milestone for the transformation of Thyssenkrupp to an industrials and service group and will lead to a significant improvement of the financial figures of Thyssenkrupp,” the group said in a statement.
It added that the “signing of the definitive agreement is expected shortly” and that the deal would be subject to clearance in several jurisdictions, including the European Union.
The new company will be called Thyssenkrupp Tata Steel and be based in the Netherlands.