Thyssenkrupp AG and Tata Steel Ltd. reached a final agreement to set up a European steel giant as some of the German company’s biggest investors expressed concern that the deal favors its Indian partner.

The tie-up to create Europe’s second-largest steel producer is part of efforts to tackle industry overcapacity. The steel market has rebounded since the joint venture was announced as demand strengthens and Donald Trump’s threat of tariffs pushes prices to their highest level in years.

While the consolidation raised hopes of greater pricing discipline, some of Thyssenkrupp’s largest shareholders, including Cevian Capital, have criticized the terms of a venture for being skewed toward Tata Steel. Thyssenkrupp’s Chief Executive Officer Heinrich Hiesinger defended the deal on Monday, highlighting the cost synergies and goal of improving competitiveness.

“We want to form a new steel champion,” Hiesinger said Monday at a press conference in Brussels. “There is tremendous value to be created.”

While a gap in the relative valuation of the two companies has opened since the deal was first mooted, the 55-45 split in favor of Thyssenkrupp for the proceeds of any initial public offering is “appropriate, especially given the synergies of about 5 billion” euros ($5.8 billion) for both parties, said the company’s Chief Financial Officer Guido Kerkhoff.

Cost Savings

Thyssenkrupp expects about 4,000 jobs to be cut from the joint venture to achieve annual cost savings estimated at as much as 500 million euros. It gave no further details on the timing of job cuts.

Thyssenkrupp fell as much as 2.7 percent in Frankfurt on Monday, and was down 1.4 percent as of 12:33 p.m. Tata Steel dropped 1.2 percent in Mumbai.

The two companies will hold an equal share in Thyssenkrupp Tata Steel B.V., which will focus on high-quality flat steel production, they said in a joint statement on Saturday. The deal comes nine months after the two steelmakers signed a memorandum of understanding to establish the venture, and is still subject to regulatory approval in several jurisdictions including the European Union.

Long-Term Commitment

The companies will jointly hold more than 50 percent of the venture for six years, with most of the cost savings occurring in the first three years, Tata Executive Director Koushik Chatterjee said Saturday. It’s a “long-term commitment,” Tata Sons Chairman Natarajan Chandrasekaran said in Brussels on Monday, adding they would focus on getting approvals before thinking about a potential IPO.

It’s expected that the merger will go into effect in 2019, and the headquarters of the new company will be based in the Amsterdam region, with its management and supervisory boards each made up of six representatives, divided between the firms.

For Mumbai-based Tata Steel, “the unchanged deal contours are a significant relief,” Edelweiss Financial Services Ltd. said in a note Monday. Jefferies Group LLC said the venture will help the Indian company cut debt and alleviate concerns over its stock, which has fallen this year.