German industrial group Thyssenkrupp signed a joint venture deal on Saturday with Tata Steel, leaving approximately 4,000 jobs at risk across both businesses.
The "50-50 joint venture" agreed by Thyssenkrupp's executive board will make the combination of the two companies' European businesses into the second-largest steel-makers in Europe, behind Arcelormittal.
Known forthwith as Thyssenkrupp Tata Steel, the firm's headquarters will be based in Amsterdam. Its total workforce of approximately 48,000 employees across 34 sites is expected to generate around €15bn (£13.3bn) in annual revenues, making cost savings of between €400m and €500m a year.
The companies had previously warned that 4,000 jobs could be lost as a result of the merger, split evenly between the two companies, half from production and half from administration.
Almost 7,000 people are employed by Tata Steel in Wales, including more than 4,000 in a steel works at Port Talbot.
A statement from Thyssenkrupp's board read:
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, effective with closing.
The deal is expected to complete either in the fourth quarter of this year or the first quarter of 2019, the company said, depending on regulatory approval from the European Commission.
Meanwhile, Tata Steel has reassured its employees at Port Talbot that plans to invest in extending the life of the plant have been approved, and will go ahead later this year.
The India-owned steel-maker made headlines in 2016 when it put up its entire UK operations for sale as the industry began to deteriorate, prompting protests from workers' unions asking to safeguard the jobs of UK steel workers.
Read more: Tata Steel to start sales process today
Unions in the UK welcomed the deal which looks to have secured the short-to-medium term future of Tata’s Port Talbot plant, the second-largest steel works in the UK.
Tony Brady, National Officer for Unite, said that workers would be seeking “guarantees over jobs and investment for the UK operations of the joint venture to secure the future of UK steel”.
The news comes as the UK experiences an uncertain environment over the future of its steel industry, after the US imposed new steel and aluminium tariffs that Prime Minister Theresa May labelled "unjustified and deeply disappointing".
At the beginning of June, the US confirmed it was imposing a 25 per cent tariff on steel and a 10 per cent tariff on aluminium imports from the EU, Mexico and Canada.