Tata Steel and Thyssenkrupp merger agreement

The businesses, which both have sites in the Black Country, signed on Saturday. They will combine their European steel businesses in a 50/50 venture.

The new company will be known as Thyssenkrupp Tata Steel,m but the final deal is subject to merger control clearance in several jurisdictions, including the European Union.

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. We are confident that this company will create value for all stakeholders.”

Thyssenkrupp's chief executive Dr Heinrich Hiesinger added: “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.”

Until finalisation Thyssenkrupp Steel Europe and Tata Steel in Europe will operate as separate companies and as competitors.

The German company's executive board approved the plans on Friday after signing a memorandum of understanding last September.

The deal will create the second largest steel maker in Europe behind ArcelorMittal.

Both firms employ a total of 48,000 workers, with Tata owning UK plants including Port Talbot in South Wales, which employs 4,000. Tata's European arm also includes sites across the Black Country employing 600, such as its Steelpark in Wednesfield.

Tata Steel Europe, which employs 8,500 in the UK, is currently looking for buyers for five ‘non-core’ businesses, including a service centre in Wolverhampton and a steel coating business in Walsall.

Thyssenkrupp's national head office in Solihull and it has plants in Cradley Heath and Birmingham.

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.

The announcement has comes amid concerns of a trade war after US president Donald Trump imposed a 25 per cent tariff on imports of steel, and a 10 per cent tariff on aluminium, on the European Union, Canada, and Mexico at the start of June.

Unions have welcomed a merger between the steel giants which ends years of uncertainty over the future of plants including Port Talbot.

Roy Rickhuss, general secretary of the Community union, said there will now be "significant" investment across Tata Steel's UK business.

"Steelworkers have fought hard to ensure the future of British steel-making. As part of this joint venture, we have secured significant investment across Tata Steel's UK business, including a repair of Port Talbot's blast furnace number five, which could see it produce steel until at least 2026," he said.

"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," he added.

Tata 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.

A statement said: "We remain committed to developing our existing employees, and bringing in new talent to improve the capability of our UK workforce whose dedication, resourcefulness and energy is so valued."

Business Secretary Greg Clark said: "This announcement is a significant and positive moment for the UK steel industry.

"We welcome the early decision regarding extending the operation of Blast Furnace 5 and confirmation that the MoU (Memorandum of Understanding) with the trade unions will be extended and apply to the new company.

"The Government will continue to work closely with and support the new management team and trade unions as the new company develops its business plan."