Tata Steel and Germany\u2019s Thyssenkrupp said on Friday they have given up hope of their planned 50:50 joint venture (JV) in Europe, anticipating the European Commission\u2019s rejection. Had the deal been cleared, it would have been the largest European steel deal since 2006 when Arcelor was taken over by industrialist Lakshmi Mittal. In a statement on Friday, Tata Steel said, \u201cThe commission today discussed the proposed JV with both Thyssenkrupp and Tata Steel. Based on the feedback received, it is increasingly clear that the Commission is not intending to clear the proposed JV as it expects substantial remedies in the form of sale of assets of the proposed venture.\u201d The transaction was aimed at extracting synergy benefits in an anaemic market and creating a \u201csustainable\u201d steel enterprise. The two had inked the JV agreement to combine their steel businesses in June last year. Read | Tata Steel shares see biggest intraday fall in 10 months after reports of ThyssenKrupp merger failure The proposed JV would have resulted in a significant deleveraging for Tata Steel as it would have transferred 2.5 billion euros to the JV company, which represents nearly 35-40% of debt in its European business. At the end of March 2019, Tata Steel\u2019s gross debt stood at about Rs 1 lakh crore, having reduced it by Rs 18,000 crore in the last six months. Last month, Tata Steel had said it was working with Thyssenkrupp to secure the required regulatory approvals for the proposed 50:50 JV. The European Commission, it said, had issued its \u2018Statement of Objection\u2019 for which both firms had recently submitted a comprehensive package of solutions. It further said that \u201ccommitments or improvements to the remedy package would adversely affect the basic foundation of the proposed joint venture and the intended synergies from the merger to such an extent that the economic logic of the joint venture would no longer be valid\u201d. Had the JV been formed it would have also realised synergies of 400-500 million euro. This, the management had said, would have improved the credit profile in the next 2-3 years. The management at Tata Steel had also said that, on a pro-forma basis, the turnover of the JV company as on the last reporting date would be around 17 billion euro and pre-synergy Ebitda (earnings before interest, tax, depreciation and amortisation) about 1.5 billion euro. Meanwhile, Thyssenkrupp was expected to transfer about 3.6 billion euro of its pension liabilities to the JV. The transaction was subject to merger control clearance in several jurisdictions, including the European Union. Read | Australia\u2019s $2.3 billion typo: Currency notes printed with this error The company had expected that about a third of synergies would be in procurement and can be realised as soon as the JV is formed. Synergies on network optimisation, which is another 20% can be realised in the first 12 months itself, they had said. As part of the deal, the two sides had agreed to combine the flat steel businesses of the two companies in Europe and the steel mill services of the Thyssenkrupp group through a 50:50 JV \u2014 a move that would have led to formation of a new player at the second position in the European steel market, having a combined turnover of 17 billion euro per annum and around 48,000 workers. It was also stated that there will be opportunities in capital expenditure management and working capital optimisation to realise additional synergies. At the same time, the future set-up and positioning of the joint venture will enable growth in higher value segments, exceeding industry growth rates. This will be achieved among other measures by redeploying R&D efforts to strengthen the positioning as quality and technology leader. The German company had also said that leveraging cost synergies will require a rationalisation in workforce over the years ahead by up to 4,000 jobs in operations and support functions that is expected to be shared roughly evenly between the two parties. Furthermore, the complete production network is to be reviewed starting in 2020 with the aim of integrating and optimising the production strategy for the entire joint venture. Tata Steel reiterated it remains committed to the strategy and will explore all options to achieve similar outcomes in the future. \u201cTata Steel will also continue to focus on its performance management to enhance its earnings and cash flow to build a sustainable and self-sustainable future for the business,\u201d it said. The company\u2019s deleveraging plan would be independent of the future of the joint venture.