Italy’s Leonardo SpA and Rheinmetall AG of Germany agreed to form a joint venture to build combat tanks in Europe, combining efforts on fighting vehicles as defense spending rises across the region.

Italy’s Leonardo and Germany’s Rheinmetall entered a joint venture for the development and production of combat vehicles, targeting potential orders of up to $54.55 billion.

Italy's Leonardo and Germany's Rheinmetall have finalised a joint venture for the development and manufacturing of military combat vehicles, in what is seen as the first step in the consolidation of the European sector.

Both companies will be equal shareholders in the new company – named Leonardo Rheinmetall Military Vehicles (LRMV) – with headquarters in Rome and La Spezia. The establishment of the company is expected by the first quarter of 2025, pending regulatory approval, with 60 percent of the work to be carried out in Italy.

The companies want to deliver a new infantry fighting vehicle to the Italian army within two years and a new main battle tank within three years.

Italy's Leonardo and Germany's Rheinmetall launched a joint venture on Tuesday to develop and manufacture military combat vehicles, in a key step for consolidation in the European defence sector. "This initiative is part of the European game to be stronger in the framework of the Atlantic Alliance.

Italy’s aerospace and defense group Leonardo and Germany’s Rheinmetall (OTCPK:RNMBY) (OTCPK:RNMBF) agreed to set up a joint venture to make combat vehicles, with the possibility of accepting as much as 50 billion euros ($54.