Rheinmetall Expands in US With $950 Million Defense Deal
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Rheinmetall AG is set to buy a U.S. military vehicle specialist for $950 million as the German company seeks to expand its position in the world’s largest defense market.
The acquisition of Loc Performance Products, which makes track systems for tanks and agricultural vehicles as well as hulls for combat platforms, will boost Rheinmetall’s production capacity in the U.S., the company said late Aug. 13. The U.S. market for army vehicle programs has a total potential of over $60 billion of orders, it said.
The American market is a strategic priority for Rheinmetall. The maker of the Leopard tanks and ammunition said in June it will expand its collaboration with Lockheed Martin Corp., the world’s largest defense company. Joint developments already include a rocket launcher able to cover a distance of some 249 miles.
The deal with Loc will add about 1,000 skilled workers, the company said, while the transaction is subject to regulatory approvals. Rheinmetall’s shares rose as much as 2% Aug. 14 in Frankfurt trading, adding to the stock more than doubling over the past year to $26.8 billion.
Strategic #acquisition in the 🇺🇸 #USA: #Rheinmetall agrees #takeover of #vehicle specialist Loc Performance https://t.co/ZLxA9wKRp8 pic.twitter.com/2FD7EGOX9L — Rheinmetall (@RheinmetallAG) August 14, 2024
Bloomberg Intelligence analyst Will Lee says, “Rheinmetall seeks greater U.S. manufacturing presence through its $950 million acquisition of Loc Performance to better compete against General Dynamics on the XM30 program (valued at over $60 billion) and Mack Defense, Navistar Defense and Oshkosh Defense on the Common Tactical Truck program (about $16 billion). Loc is a defense supplier with content on existing Army combat vehicles.”
Rheinmetall is among a number of European weapons contractors that has seen sales surge to records amid the growing threat from Russia. Earlier this month, CEO Armin Papperger said revenue is set to rise by about 2 billion euros annually after investments in additional capacity and acquisitions since Russia’s annexation of Crimea in 2014. For this year, revenue is expected to rise to around 10 billion euros.
The company is also expanding its presence in Europe. Rheinmetall and Leonardo SpA last month said they’ll work together on developing a new main battle tank and platform for an armored infantry combat vehicle to the Italian Army.
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