Tata Steel is to sell its Long Products Europe business, including its Workington plant, to UK investment firm Greybull Capital.
The business will be rebranded as "British Steel" once the deal is completed in eight weeks.
The new business will include the engineering workshop in Workington along with manufacturing, design, sales and distributions facilities in Scunthorpe, Teeside, York and France.
The move will safeguard more than 4,000 jobs in the UK, including the 225 workers based at Workington, but workers have been asked to accept a pay cut and less generous pension arrangements. Greybull said it was arranging a £400m investment package as part of the deal.
Business Secretary Sajid Javid described the announcement as a “step in the right direction” for the long-term future of British steel manufacturing.
Bimlendra Jha, Executive Chairman of the stand-alone Long Products Europe business, added: "This sale is the best possible outcome for employees who have worked relentlessly to ensure the business's survival, and helped to make it attractive to a potential buyer."
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