Tata Steel and German firm Thyssenkrupp have agreed a merger deal which it is hoped will guarantee thousands of UK steel industry jobs.
The flat steel businesses of the two companies in Europe and the steel mill services of the Thyssenkrupp group will merge in the proposed 50:50 joint venture.
The German-based company's executive board approved the plans on Friday after signing a memorandum of understanding last September.
Both firms employ a total of 48,000 workers, with Tata owning UK plants including Port Talbot in South Wales, which employs 4,000 people.
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."
The tie-up will create a £13bn steel giant better able to compete in the increasingly tough global steel industry.
The expectation is that an agreement will come with guarantees to protect the jobs of Tata’s 8,500 steelworkers in the UK well into the next decade.
Industry sources say the terms of the deal go beyond assurances given last year about Tata’s steel production in the UK, which promised to maintain production at the company’s giant Port Talbot plant until 2021.
Port Talbot is the focus of Tata’s steel-making operations in Britain, employing the largest slice of the company’s UK staff.
Led by steelworkers’ union Community and backed by peers Unite and GMB, workers’ groups have fought hard to protect British interests in the merged business.
It is understood that they have secured agreements for “significant” investment across Tata’s UK operations, including repair works on the Number 5 blast furnace at Port Talbot, meaning it could produce steel until 2026.
There is also thought to be a commitment there will be no compulsory redundancies for next eight years, and for the first £200m of operating profits to be reinvested back into the business.
Focused on three main hubs – IJmuiden in the Netherlands, Duisburg in Germany and Port Talbot in South Wales – the tie-up is expected to lead to about 4,000 redundancies as overlaps are eliminated.
It aims to create a combined business to be called Thyssenkrupp Tata Steel, a 50:50 venture between the two businesses whose 48,000 staff would be able to produce 21m tonnes of steel a year.
Earlier this month unions threatened to drop their support for the mega-merger unless the companies guaranteed that UK jobs and plants would be protected.