BERLIN (AP) – Germany’s Thyssenkrupp and Tata Steel of India signed a preliminary deal on Wednesday to merge their European steel operations, a combination that could lead to up to 4,000 job cuts.
The move to create Europe’s second-largest steel company is an effort to consolidate the industry, which has long struggled with excess capacity and competition, particularly from China.
The two firms signed a memorandum of understanding to form a 50-50 joint venture. Negotiations about details are to be concluded in time for a formal signing of the transaction at the beginning of 2018, and the merger of the second- and third-biggest players in Europe will require approval from the companies’ boards and from antitrust authorities.
The proposed merger, the result of talks first disclosed more than a year ago, would produce a company with revenue of about 15 billion euros ($18 billion) per year and, at present, some 48,000 employees at 34 locations. The companies expect to save between 400 million euros and 600 million euros ($479 million and $718 million) in costs per year by integrating activities including research and development.
They say the deal could close in late 2018.