Thyssenkrupp, workers strike deal to pave way for Tata Steel merger

* Job, site security until Sept. 30, 2026

* Deal removes major hurdle to planned Tata Steel (BSE: TATASTEEL.BO - news) deal

* Thyssenkrupp (IOB: 0O1C.IL - news) to keep stake in JV for at least six years (Recasts, adds labour quote, context)

By Matthias Inverardi, Tom Käckenhoff and Christoph Steitz

DUESSELDORF/FRANKFURT, Dec (Shanghai: 600875.SS - news) 21 (Reuters) - Workers on Thursday struck a deal with German industrial company Thyssenkrupp to secure steel plants and jobs, a big step towards a planned merger of the group's European steel business with that of India's Tata Steel.

The deal removes a major obstacle to the merger, planned for next year, which will create Europe's second-largest steel group after ArcelorMittal (LSE: 0NSF.L - news) and continue Thyssenkrupp's efforts to transform itself into a more technology-focused company.

The workers' approval for the deal, first announced in September, is seen as key to getting the deal done and shows Thyssenkrupp's commitment to seek workers' consent for far-reaching structural changes.

"The outcome achieved today represents a key prerequisite for meeting our strategic objectives and at the same time satisfying the interests of our employees," Thyssenkrupp Chief Executive Heinrich Hiesinger said in a statement.

The agreement, which still needs to be approved by the members of IG Metall, Germany's most powerful union, foresees no forced layoffs or major site closures until Sept. 30, 2026, labour representatives and the group said.

This comes close to the union's demands for 10 years, which were made in response to concerns that Thyssenkrupp might be shirking responsibility for its volatile steel unit, whose roots go back more than 200 years, by merging it with a rival.

Thyssenkrupp and Tata Steel in September reached a preliminary agreement to merge their European steel units to create the continent's second-largest steelmaker after ArcelorMittal, with 15 billion euros ($17.81 billion) of sales.

They said the deal will help them to tackle overcapacity in Europe's steel market, which faces cheap imports, subdued construction demand and inefficient legacy plants. The companies have already announced 4,000 job cuts as part of the tie-up.

Under Thursday's labour deal, Thyssenkrupp said it would keep a stake in the joint venture for at least six years. It said a change in the entity's shareholder structure during that time, possibly as the result of a stock market listing, could not be ruled out.

"That means that Thyssenkrupp management will share responsibility for either the success or the failure of a possible joint venture," Detlef Wetzel, deputy supervisory board chairman of Thyssenkrupp Steel Europe, told Reuters.

Thyssenkrupp, which also said it would invest at least 400 million euros a year at its German steel sites, still needs to get the joint venture deal through its supervisory board before a final contract can be signed in 2018. ($1 = 0.8423 euros) (Editing by Jane Merriman)