ThyssenKrupp and Tata merge in landmark deal making Europe's 2nd largest steelmaker

Tata steel limited a subsidiary of the Tata Group entered into a landmark deal on Saturday with it announced a mergerwith Germany's ThyssenKrupp.

The final agreement was signed today marking a long-expected steel joint venture. It comes after months of negotiations since an initial agreement which announced in September last year,

The merger will create Europe's second-biggest steelmaker.

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Both companies hope it will help them respond to challenges in the volatile steel industry, including overcapacity.

The largest deal in Europe's steel industry since the takeover of Arcelor by Mittal in 2006, the 50-50 joint venture - to be named ThyssenKrupp Tata Steel - will have about 48,000 workers and

Based in the Netherlands, the joint venture forms the core of ThyssenKrupp CEO Heinrich Hiesinger's plan to turn his steel-to-submarines conglomerate into a technology company.

"The joint venture not only addresses the challenges of the European steel industry," Hiesinger said. "It is the only solution to create a significant additional value of around 5 billion euros for both ThyssenKrupp and Tata Steel due to joint synergies which cannot be realized in a stand-alone scenario."

Tata Steel Chairman Natarajan Chandrasekaran, in a separate statement, said the joint venture will create "a strong pan- European steel company that is structurally robust and competitive".

The deal comes as European steelmakers face tariffs of 25 per cent on their exports to the United States, their biggest market. That might force the local market to absorb more volume as a result.

Since the tariffs were announced in late May, shares in European steelmakers ArcelorMittal, ThyssenKrupp, Salzgitter and Voestalpine have lost 8 to 17 per cent.

(With inputs from Reuters)