German armored vehicles-maker Rheinmetall has confirmed initial talks about an acquisition of its rival Krauss-Maffei Wegmann, a move that would reorder the industry landscape involved in producing a new European main battle tank.
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A Leopard 2 tank of the German military participates in exercises at the Bundeswehr training grounds on Oct. 14, 2016, near Bergen, Germany. (Alexander Koerner/Getty Images)
According to a brief Rheinmetall statement, on the table is the takeover of KMW in the context of its partnership with French tank maker Nexter, known under the name KNDS. KMW and Nexter each own 50 percent of their Franco-German joint venture.
KNDS and Rheinmetall were expected to pitch separate design proposals next year for the Main Ground Combat System, a novel tank meant as one of three signature military projects propelling the Berlin-Paris defense partnership. It remains to be seen how the dynamic of a KMW acquisition by Rheinmetall would play into those plans.
Developing a family of next-generation combat vehicles is a top priority of the U.S. Army as part of its modernization strategy focused on multi-domain operations.
By: Jen Judson
Citing industry experts, the newspaper Die Welton Tuesday wrote that the French government, through state-owned Nexter’s deal with KMW, is expected to have a say in the transaction. Paris may even have a right of first refusal for KMW’s portion in KNDS, the newspaper reported.
Rheinmetall’s statement on Monday noted that a final decision regarding the way ahead depends on a “multitude of political, economic and regulatory” aspects still to be sorted out.
A takeover deal could put to rest the question of what vehicles German defense companies will pitch for multibillion-dollar modernization programs of the U.S. ground services. Rheinmetall is already offering the Lynx armored fighting vehicle as a Bradley replacement. KMW could make another attempt at selling the Puma vehicle, though Rheinmetall is also part of the joint venture producing that vehicle for the German forces.