More than 4,000 jobs are expected to be saved as Tata Steel sells off its Long Products Europe division to a London-based investment firm Greybull Capital. The deal will also see Greybull buy Tata's plant in Scunthorpe, North Lincolnshire, and inject £400m ($569m) into the business.
"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," said Bimlendra Jha, executive chairman of the stand-alone Long Products Europe operation.
The move comes after months of talks between Tata and Greybull and will also cover two mills in Teesside, an engineering workshop in Workington, a design consultancy in York, and associated distribution facilities, as well as a mill in northern France.
Greybull revealed the business' management team will stay and run the business, while the search for a permanent chief executive has begun.
Marc Meyohas, the managing partner of Greybull, added: "We are delighted to have reached agreement for the acquisition of Long Products Europe , which we believe can become a strong business, with a highly skilled workforce and great potential.
"I would personally like to thank Tata Steel, the trade unions and the British and French Governments for their support, which was essential in ensuring the agreement. We are now focused on taking the deal to completion in order that the business can start its next chapter with confidence."
The deal also includes a proposed 3% pay cut for the steelworkers for the first year of Greybull's ownership, which union members are currently being balloted on.
The announcement comes as the sale for Tata Steel's UK operations is officially launched. Around 15 senior representatives from the steelworkers' union Community plan to lobby Business Secretary Sajid Javid before he gives a statement in the House of Commons at 4pm BST.
The officials will press Javid when the top Conservative meets the All Party Parliamentary Group (APPG) on steel.
Roy Rickhuss, General Secretary of Community said: "Government has a crucial role to play in this process and our members will be demanding that Sajid Javid does not let our industry die on his watch.
"Selling a large part of the UK steel industry will take months not weeks. It is vital that production continues until a new operator can be found and that certain parts are not cherry-picked at the expense of our steelmaking capacity."