-- Nexter Systems (“Nexter”), French leader of land defense systems, has announced the signing of the merger with its German counterpart Krauss-Maffei Wegmann (“KMW”).
Nexter, fully owned by GIAT Industries (a state-owned company), designs and manufactures land defense systems ranging from armored vehicles (VBCI, Aravis and Titus), artillery (Caesar and Trajan) to ammunition and support systems. Generating €1.1bn sales in 2014, Nexter is the French leader in the land defense industry. With locations in France, Belgium and Italy, the Group exports more than half of its revenues.
KMW is a German family controlled group which produces notably the Leopard combat tank, the Puma and Boxer armoured vehicles and the PzH 2000 artillery system. KMW achieved around €750m sales in 2014. Its products are currently used by more than 50 countries around the world.
After announcing the project of an alliance in July 2014, Nexter, KMW and their respective shareholders have concluded to form an alliance through a holding company. This alliance will create a European leader in land defense systems of nearly €2bn sales, a €9bn backlog and more than 6,000 employees. A key step in the consolidation of the European defense industry, the alliance will benefit from complementary products and geographies and reinforced R&D capabilities in an increasingly competitive environment. Their European and NATO clients will also benefit from higher standardization and equipment interoperability between Nexter and KMW systems. This alliance will be the biggest consolidation movement in the European defense industry since the founding of Airbus (formerly EADS) in 2000.
The holding company will be incorporated in Netherlands and will be equally held by GIAT Industries and Wegmann. The holding company will be the sole shareholder of Nexter and KMW. In the context of a long-term and industrial perspective; the management of the holding company will aim at a strict equilibrium between both shareholders.
The closing of the transaction, planned by the end of 2015, is still subject to customary legal authorizations.
The Paul Hastings team advising Nexter was led by Paris partner Olivier Deren, with Paris partners Alexis Terray (corporate), Allard de Waal (tax), Pierre Kirch (competition), Deborah Sankowicz and Stéphane Henry (both employment); plus Frankfurt partner Regina Engelstaedter and senior tax adviser Uwe Halbig, and Washington DC partner Scott Flicker.
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