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.

German weapons manufacturer Rheinmetall and Italian defence contractor Leonardo are jointly launching a new company to build battle tanks, initially for the Italian military, the firms announced on Tuesday.

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 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.

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.