Tata Steel and German firm Thyssenkrupp have agreed a deal that will make the merged firm Europe’s second biggest steelmaker.
Thyssenkrupp’s executive board agreed to “create a 50/50 joint venture”, which will combine the European steel businesses of Thyssenkrupp and Tata Steel.
To be 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 around 34 sites, producing around 21 million tons of steel per year for 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.
The German-based company’s executive board approved the plans on Friday after signing a memorandum of understanding last September.
A statement from Thyssenkrupp said: “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.”
Final signatures would follow “shortly”, the board said, while competition authorities in the European Union and other jurisdictions must still give the go-ahead.
Tata Steel owns Britain’s largest steelworks plant at Port Talbot in South Wales, which employs 4,000 people.
When the memorandum was signed, Hans Fisher, chief executive of Tata Steel Europe, said there would be potential job losses of 2,000 split between the two companies, with those initially in sales and marketing.
Tata Steel hit the headlines last year when it put its entire UK operations up for sale amid a deteriorating industry environment.
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.