Rheinmetall and MAN SE have agreed to form a 51-49 percent joint venture to make wheeled vehicles for the armed forces that will have combined annual sales of over 1 billion euros ($1.45 billion).
The two German companies, which have been in talks since at least March of last year, said in a statement last week that Rheinmetall MAN Military Vehicles GmbH (RMMV) would be created this year by merging sales and development activities, Reuters reports.
The second stage encompasses bringing production sites into the new venture by the end of next year, increasing the staff to about 1300 from 370.
“The new company follows the trend towards the joint acquisition of logistical and tactical military vehicles, whose protective and mobility characteristics have become highly similar because of current operational conditions,” said Rheinmetall Chief Executive Klaus Eberhardt.
“With their joint enterprise MAN and Rheinmetall are at the same time making an important contribution to the necessary consolidation of military vehicle systems at national and European levels,” he added.
The plan is still subject to approval from the competition authorities.
Credit Suisse has argued that the well-flagged deal may mark a pivotal step towards the disposal of Rheinmetall’s automotive engine parts business to focus on being a pure-play defence supplier.
Rheinmetall’s Kiel-based unit Rheinmetall Landsystems GmBH and its German rival Krauss-Maffei Wegmann together build the Puma armoured tracked infantry fighting vehicle and are often considered to be ideal partners for a merger.
“With this new company we are combining the strong MAN and Rheinmetall brands and the complementary technological core competencies of the two partners to form a globally operating system provider, which will present one face to the military customer with the goal of improving its position in the world market,” said Dr.-Ing. Georg Pachta-Reyhofen, Chairman of the Executive Board of MAN Nutzfahrzeuge AG at the signing of the contract.
Klaus Eberhardt, Chairman of the Executive Board of Rheinmetall AG added in a media statement that the “new company follows the trend towards the joint acquisition of logistical and tactical military vehicles, whose protective and mobility characteristics have become highly similar because of current operational conditions.”
In South Africa, Rheinmetall’s Waffe Munition division holds a 51% equity holding in Denel’s munitions business in terms of a deal inked in September 2008. Denel retains a 49% share in
Rheinmetall Denel Munition (Pty) Ltd.
In New York, Rheinmetall, now also owner of Oerlikon of Switzerland, is a defendant in a long-running international lawsuit brought by apartheid victims.