German steel producer Thyssenkrupp and India’s Tata Steel have made a preliminary agreement to merge their European steel operations, which will create Europe’s No.2 steel producer after ArcelorMittal, reports Reuters.
The two companies have signed a memorandum of understanding that proposes a 50/50 joint venture, leading to annual cost savings of up to 600 million euros.
They have also announced that this move will require a reduction in workforce leading to about 4,000 job losses that will be shared evenly between the two companies, with half coming from administration and half from production.
This has raised concerns among unions and policy-makers in some of the affected European countries.
According to German Economy Minister Brigitte Zypries, “The employees are not yet convinced about this decision and they are very concerned about job losses,” Reuters cites her statement.
According to BBC, British unions and politicians are calling for Tata Steel and Thyssenkrupp to safeguard Welsh jobs when they go ahead with their planned merger.
The companies hope to sign the final deal early next year, and complete the merger by the end of 2018. The merger is still subject to approval by the relevant authorities.
Source: Reuters; BBC; NL Times