[World News] Nexter, KMW Announce Joint Venture With 'Intended Unification'

Nexter produces the French Leclerc tank, left, and KMW the Leopard tank, right. (Getty Images)

Nexter and Krauss-Maffei Wegmann (KMW) said on Tuesday their owners have agreed to set up an alliance with the creation of a 50:50 joint venture to house the French-German defense technology group, marking a major move in European cross-border consolidation in land armaments.

The owners met in Paris and signed heads of agreement, showing a determination to “share their future and the road ahead,” the companies said in a joint statement.

A target date for completion of the deal is “early 2015,” the companies said.

Nexter is state-owned while KMW is controlled by the Bode family.

Under the agreement, there is an “intended unification” of the two companies, with the owners putting their shares into a newly incorporated joint holding company, the statement said.

The owners will receive 50 percent of the holding company, which will be the sole shareholder in KMW and Nexter, the statement said.

The deal will mark a step in consolidation of defense technology in Europe, while boosting standardization and interoperability of military equipment for European and NATO customers, the companies said. The alliance also would create a dependable industrial base, they said.

The alliance will create a European defense technology group with combined annual sales nearing €2 billion (US $2.7 billion), a combined order book worth €6.5 billion and more than 6,000 staff.

Nexter CEO Philippe Burtin, ahead of the Eurosatory trade show, told Defense News the company is pursuing consolidation talks.

“The Europeans are working on it; it’s reassuring. We, the Europeans, are working on the future of European defense,” he said.

In May 2013, a French source told Defense News, “We’re extremely keen for a very strong partnership between Krauss-Maffei Wegmann and Nexter.

“It’s being discussed between owners,” the source said. ■

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