Tata Steel and Thyssenkrupp have inked definitive agreements to combine their European steel businesses in a 50/50 joint venture.

The move follows the signing of a Memorandum of Understanding in September last year.

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The proposed new company, to be known as Thyssenkrupp Tata Steel will be positioned as a pan-European flat steel producer. The transaction is subject to merger control clearance in several jurisdictions, including the European Union.

“The joint venture will create a strong pan-European steel company that is structurally robust and competitive,” said Tata Steel chairman, Natarajan Chandrasekaran.

“This is a significant milestone for Tata Steel and we remain fully committed to the long-term interest of the joint venture company. We are confident this company will create value for all stakeholders.”

For his part, Thyssenkrupp CEO, Heinrich Hiesinger added: “We will create a highly competitive European steel player – based on a strong industrial logic and strategic rationale. We will secure jobs and contribute to maintaining value chains in European core industries.”

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Until closing, Thyssenkrupp Steel Europe and Tata Steel in Europe will operate as separate companies and as competitors.

Only after closing will Thyssenkrupp Steel Europe and Tata Steel in Europe will be integrated as one company.

British unions welcomed the deal with GMB national officer, Ross Murdoch noting: “Along with our sister unions in Tata Steel, GMB has always strived to secure jobs and long-term investment for the highly skilled workforce within Tata Steel UK.

“We will continue to ensure jobs and investment remain the key underpinning priorities within any final joint venture, which must equate to opportunities for our members in the UK, particularly after the difficult and uncertain recent times they have faced.”