01.07.2014

German and French tank builder close up

Two of the greatest among the European arms companies forge an alliance. First, the tank manufacturer Krauss-Maffei Wegmann and the rival Nexter planning a joint venture, in the long run a merger.


Battle tank Leopard 2 A6 Krauss-Maffei Wegmann (Photo: Getty Images)

A corresponding declaration of principles was signed in Paris, shared Krauss-Maffei Wegmann (KMW) and the French Ministry of Defence on Tuesday evening. The merger of KMW with the French state company Nexter Systems under the umbrella of a joint holding company will establish a Franco-German defense technology company with close to two billion euros in annual sales, a backlog of about 6.5 billion euros and more than 6000 employees. In Nexter currently working about 2,800 people, KMW has indicated that approximately 3,200 employees in nine international locations serving armed forces from more than 30 nations. Among the most famous products of Krauss-Maffei is one of the main battle tank Leopard, Nexter manufactures, the competitive model Leclerc.


Leclerc tank of Nexter Systems (Photo: Reuters)

Each fifty percent of the shares for both partners

The French tanks and munitions producer Nexter has been fully owned by the state. Main shareholder of KMW are the family Bode Wegmann and silent partners. In the future, each hold half mentioned in the "head" joint venture France and the previous KMW owners. The new company will be headed by a German and a French tip. The deal is expected to be until spring 2015 signed and sealed. In the long term, a merger will be sought, it said. The planned merger of the two arms companies has yet to be tested by the competition authorities.

So far, competitors

So far, the defense contractors made ​​on both sides of the Rhine strong competition: In April 2013, KMW sat in the struggle for a multibillion-dollar armored-order from Qatar against the French competition by. The family business is now supplying 62 Leopard main battle tank of the type 2 and 24 howitzers to the desert state. Even Saudi Arabia has expressed an interest in more than 200 Leopard tanks.

Given shrinking defense budget is the industry in Europe for years under pressure to consolidate in order to compete with large corporations from the USA. Krauss-Maffei Wegmann and Nexter Systems are hoping for synergies. It was said by the French side, Nexter wanted to use the power of KMW to better commercialize technologies such as turrets and ammunition. KMW could in turn benefit from Nexters technology program and so develop new products.