Panther and Lynx
German-Italian tank alliance waiting for mega deal
03.07.2024, 17:46
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Italy reportedly wants to order new tanks for 20 billion euros. Industry giants Rheinmetall and Leonardo are taking on the contract and laying the groundwork for it. Previously, a cooperation with the Leopard manufacturer had failed.
The German arms company Rheinmetall is getting ready for a multi-billion euro contract from Italy to supply hundreds of tanks. To this end, the company wants to set up a joint venture with the Italian arms giant Leonardo. Both companies signed a letter of intent to this effect. Both Rheinmetall and Leonardo are among the largest arms companies in Europe.
The industry is doing well in light of the war in Ukraine and the conflicts in other regions. Today, the Bundestag’s budget and defense committees gave the green light to the purchase of 105 Leopard 2A8 battle tanks for the German army. The order is worth almost three billion euros. The defense company KNDS is to deliver the tanks to the German army by 2030. Rheinmetell is supplying the main weapon.
“We want to set new standards”
The two shareholders will each hold 50 percent of the new company. It is to develop a battle tank and an infantry fighting vehicle. The latter is to be a version of Rheinmetall’s Lynx infantry fighting vehicle, while the battle tank is likely to be the Panther. Rheinmetall is touting this steel colossus as its latest generation of battle tanks. However, it is not yet ready for series production. The new joint venture is to land an order from Italy which, according to media reports, could have a volume of 20 billion euros and a term of more than ten years.
“Together we want to set new standards and open the door to a new generation of ultra-modern combat vehicles in and for Europe,” explained Rheinmetall CEO Armin Papperger. “We are thus addressing the Italian market as well as other partner states that need to modernize their combat systems.”
Leonardo was originally supposed to work with the German part of the European arms company KNDS, the former Krauss-Maffei Wegmann. However, this agreement to build Leopard battle tanks fell through. Now Rheinmetall is stepping into the breach.
“We see this agreement as a fundamental contribution to the creation of a common European defense area,” said Leonardo CEO Roberto Cingaloni. Rheinmetall did not provide any information about the possible numbers of units that the planned joint venture is targeting. According to information from the “Handelsblatt”, the project involves more than 550 tanks, of which more than 200 are Panthers and at least 350 Lynx.
Rheinmetall already has three subsidiaries in the southern European country with around 1,400 employees at five locations. In order for the letter of intent for the joint venture to be implemented, approval from the relevant regulatory authorities is still required.
Rheinmetall has been growing strongly since the outbreak of the war in Ukraine. The arms manufacturer recently received framework contracts from the German army. One of them involves artillery ammunition worth up to 8.5 billion euros and the other involves military trucks worth up to 3.5 billion euros. The large Italian order would further accelerate the already steep growth trajectory. Leonardo, with its more than 50,000 employees, recently had an annual turnover of more than 15 billion euros.
In 2023, Rheinmetall had sales of 7.2 billion euros with around 34,000 employees. The Düsseldorf-based company’s order books are fuller than ever. The DAX group’s share price has increased more than sixfold since Russia’s attack on Ukraine and the turning point announced by Chancellor Olaf Scholz, including the 100 billion euro special fund for the Bundeswehr, to currently more than 500 euros per share.