A company logo can be seen outside Tata's steel mill near Rotherham, UK, in this file photo from March 30, 2016. REUTERS / Phil Noble / File Photo  Tata Steel Chairman Natarajan Chandrasekaran said in a separate statement that the joint venture will "create a strong pan-European steel company that is structurally robust and competitive."
The deal comes about as European steelmakers face tariffs of 25 percent on their exports to the United States, their largest market. This could force local markets to absorb more of steel production.
Since the announcement of tariffs at the end of May, the shares in the European steel producers ArcelorMittal, Thyssenkrupp, Salzgitter ( SZGG.DE ) and Voestalpine ( VOES.VI ) have lost between 8 and 17 Percent.
Hiesinger had been pressured by activists Cevian and Elliott to obtain more commitments from Tata Steel, whose European operations have been worse off than Thyssen since the announcement of the agreement, leading to a valuation gap.
Thyssenkrupp said the deal included a "reasonable compensation" for the gap in the mid three-digit million euro range: if the joint venture made a generally anticipated IPO, it would be a larger share of the proceeds.
Thyssenkrupp has also reserved the right to decide when an initial public offering could take place. The joint venture aimed to distribute a dividend in the low to mid three-digit million euro range.
The German group also said that it now expects annual synergies of between € 400 million and € 500 million from the transaction. Additional synergies are possible by managing investments and optimizing working capital.
Most synergies will be realized in the first three years of the joint venture, said Thyssenkrupp's CFO Guido Kerkhoff at a investor meeting.
Tata Steel will continue to be responsible for environmental risks in the UK, where its Port Talbot plant, the least profitable joint venture company, is based, said Markus Grolms, Deputy Chairman of Thyssenkrupp's Supervisory Board.
Due to large pension obligations, Port Talbot was an important issue in the early stages of inter-company bargaining before an agreement was reached last year.
Tony Brady, National Officer of Unite, the UK's largest union, said workers "are seeking guarantees of jobs and investment for British Joint Venture operations to secure the future of British steel."
The Dutch unit of Tata Steel will also be part of the joint venture's cash pooling mechanism, meaning that the unit's cash flow will not be restricted. This was an important requirement for the German workers concerned that Tata would give his own workers better conditions in the new company.
"Yes, we want to protect people, but we also want a company with better opportunities and fewer risks," said Grolms.
The management of Thyssenkrupp will present a refined strategy to its Supervisory Board in the second week of July. Sources said a sale of its Materials Services unit and could involve further cost reductions.
($ 1 = 0.8559 euros)
Additional coverage by Andy Bruce in London; Edited by Sabine Wollrab, Douglas Busvine, Cynthia Osterman, Clelia Oziel