FRANKFURT, Germany – Steel giants ThyssenKrupp and Tata Steel signed on Wednesday a memorandum of understanding combining their European steel activities in a 50/50 joint venture, according to a statement issued by ThyssenKrupp.

Investors have been advised the new entity could generate pro-forma sales of about 15 billion euros ($18 billion) and a workforce of about 48,000, currently at 34 locations.

Shipments are forecast at around 21 million tons per year.

“Under the planned joint venture, we are giving the European steel activities of ThyssenKrupp and Tata a lasting future,” said the CEO of ThyssenKrupp AG, Dr. Heinrich Hiesinger. “In Tata, we have found a partner with a very good strategic and cultural fit.”

Meanwhile, Natarajan Chandrasekaran, chairman of Tata Steel, said “The Tata Group and ThyssenKrupp have a strong heritage in the global steel industry and share similar culture and values.”

The new enterprise will be managed through a lean holding company based in the Netherlands and will become Europe’s second largest steel producer.

Leveraging the cost synergies across the entire entity will require workforce future cuts by up to 2,000 jobs in administration and potentially a further 2,000 jobs in production.

A contract is expected to be signed early in 2018, and the effective start of the joint venture later that year, after antitrust approval by the relevant authorities.