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The second- and third-largest steelmakers in Europe have agreed to merge steelmaking operations on the continent. India’s Tata Steel and Germany’s thyssenkrupp plan to enter a 50/50 joint venture. The agreement is expected to be targeted for early 2018 and to close by the end of the year.

The companies hope to create a leading European flat-rolled steel producer, and position the venture as a quality and technology leader. The new entity will have sales of almost $18 billion and shipments of about 21 million tons annually. The two companies currently operate 34 locations in Europe.

“Under the planned joint venture, we are giving the European steel activities of thyssenkrupp and Tata a lasting future. We are tackling the structural challenges of the European steel industry and creating a strong No. 2,” says Dr. Heinrich Hiesinger, CEO of thyssenkrupp AG. “In Tata, we have found a partner with a very good strategic and cultural fit. Not only do we share a clear performance orientation, but also the same understanding of entrepreneurial responsibility toward workforce and society.”

The venture will be named thyssenkrupp Tata Steel. It will be managed through a holding company based in the Netherlands, with a two-tier management structure comprised of a management and supervisory board with equal representation from both companies.

“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,” says Natarajan Chandrasekaran, chairman of Tata Steel. “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.”

Thyssenkrupp will contribute its Steel Europe businesses to the venture, plus thyssenkrupp MillServices & Systems GmbH, a steel mill services provider and part of the company’s Material Services business. Tata will contribute all of its flat steel activities in Europe.