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European defense giants sign merger agreement

The merger plan of Germany's Krauss-Maffei Wegmann and Nexter of France moves forward with the formal signing of a merger agreement.

By Richard Tomkins
Gerrman Army Leopard II tanks by KMW, which plans to merge with a French company. Photo: German Army.
Gerrman Army Leopard II tanks by KMW, which plans to merge with a French company. Photo: German Army.

MUNICH, Germany, July 30 (UPI) -- Nexter Systems of France and Germany's have formally signed their merger agreement following a year of talks.

The agreement to merge – expected to take place at the end of the year – took place earlier this week at the French Ministry of Defense and paves the way for creation of Newco, the joint holding company under which the German-French defense group will operate.

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The proposed merger, however, still remains subject to approval by the regulatory agencies of each country.

"KMW, Nexter and their owners view this step as decisive for the consolidation of the defense technology industry in Europe," the two companies said in a joint news release. "The product portfolios of the two companies and their regional presences on the world market complement each other.

"The alliance of KMW and Nexter creates a group with the momentum and innovative force required to succeed and prosper in international competition. In addition, it offers to its European and NATO customers the opportunity of increased standardization and interoperability for their defense equipment, with a dependable industrial base."

Krauss-Maffei Wegmann GmbH & Co. KG is currently under the ownership of Wegmann GmbH & Co. It is the maker of armored products such as the Leopard main battle tank and other armored vehicles. Nexter S. A. is owned by GIAT Industries S.A, a French government holding company. It makes munitions and other key defense products, such as armored vehicles. They have a combined annual turnover of nearly $2.2 billion and a combined order book of nearly $10 billion.

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Under the merger agreement, each will own 50 percent of the Netherlands-headquartered Newco holding company.

"The governance of the holding company will reflect the equal balance between the two shareholders with a long-term industrial perspective," the companies said.

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