Singapore Technologies Engineering or ST Engineering, which bought Brazil's Technicae Projetos e Servicos Automotivos, said it hopes to build its Latin American business from automotive maintenance right up to supplying components and service for diverse warfare systems.
Technicae emerged on the Latin American defense industry scene last year as a provider of automotive maintenance, repair and overhaul services to military customers.
Last week, ST Kinetics paid $465,000 with an additional $1.77 million capital call in proportion to its shares in the company, using ST Kinetics' Singapore subsidiary Mobility Systems for the purchase.
ST Engineering has dedicated divisions specializing in aerospace, electronics, kinetics and marine-related systems.
ST Kinetics said in a statement the companies reached the deal on a "willing-buyer, willing-seller" basis. "Following the acquisition, Technicae becomes a subsidiary of ST Kinetics."
Analysts said both companies have ambition to expand their presence in Latin America, where demand for locally manufactured systems has been driven by political considerations of regional independence and avoidance of dependence on one major power or other.
U.S. defense and security companies have struggled to secure buyers in some sectors of Latin America's expanding military acquisitions landscape. Some prospective customers are said to fear their acquisitions will raise controversies in U.S. Congress or draw more media attention than preferred by the procurement agencies.
ST Kinetics made clear it intends to target not just Brazil but all of Latin America.
"The acquisition is part of ST Kinetics' strategic plan to establish a presence in Brazil to further its defense business in Brazil, and thereafter grow ST Kinetics' presence in the rest of South America, the company said.
ST Engineering has been investing in outside companies that specialize in components and services for land warfare systems, Defense News said on its website.
In March 2012, its subsidiary Mobility Systems, which conducted the Brazilian purchase, increased its shares in Ireland-based Timoney Holdings from 25 to 27.42 percent. Timoney designs and supplies heavy-duty independent suspension and drive systems for military and commercial vehicles.
At the Latin America Defense and Security International Exhibition in April, STK Chief Marketing Officer Patrick Choy revealed the company was shopping for a suitable partner in Brazil, Shephardmedia.com said.
"We are prepared to set up a facility locally either buying or invest in a company or build ourselves or partners with local companies," he said.
Initially, STK will look to engage in vehicle reset and upgrade work as it has "the capability and experience to provide total life-cycle solutions."
The company is aiming to generate new business in battlefield management systems and "equipment that can refresh old inventories and provide lethal upgrades. I think this is suitable for Latin America. There are a lot of old vehicles around: M113s, Urutus, Cascavels, also other vehicles like trucks," Choy told Shephardmedia.com.
In the meantime, Brazil's Embraer has hinted at plans to diversify from aviation to land-based vehicles and naval ships to round off its growth in the military sector.