Tata Steel and thyssenkrupp AG have signed a Memorandum of Understanding to create a leading European steel enterprise by combining the flat steel businesses of the two companies in Europe and the steel mill services of the thyssenkrupp group. The proposed 50:50 joint venture-thyssenkrupp Tata Steel-would be focused on quality and technology leadership, and the supply of premium and differentiated products to customers, with annual shipments of about 21 million tonnes of flat steel products.

The joint venture would have a pro forma turnover of about Euro 15 billion per annum (Rs 1,150 billion) and currently employs about 48,000 people spread across various locations. It would be headquartered in the Amsterdam region of the Netherlands. The proposed combination of businesses would be formed through a non-cash transaction framework, based on fair valuation where both shareholders would contribute debt and liabilities to achieve an equal shareholding in the venture.

N Chandrasekaran, Chairman, Tata Steel, said, "The Tata Group and thyssenkrupp have a strong heritage in the global steel industry and share similar culture and values. This partnership is a momentous occasion for both partners, who will focus on building a strong European steel enterprise. The strategic logic of the proposed joint venture in Europe is based on very strong fundamentals and I am confident that thyssenkrupp Tata Steel will have a great future."

Shares of the company gained Rs 3.8, or 0.56%, to trade at Rs 680.35. The total volume of shares traded was 240,975 at the BSE (10.24 a.m., Wednesday).