Germany and France are going to develop the Main Battle Tank of the XXI century. According to DefenseNews, French Nexter Group and German family-controlled Krauss Maffei-Wegmann are on track to forge a cross-border link up in the land weapons sector this year. The French state-owned company said: «On July 1, 2014, the shareholders of the two French and German companies signed a memorandum of understanding for an equally owned alliance. This project is progressing and should produce concrete results in 2015».
On the business front, the Direction Générale de l’Armement (Defence Procurement Agency, DGA) has awarded a contract worth some €330 million ($349.4 million) to Nexter Systems to upgrade 200 Leclerc tanks and 18 tank recovery vehicles with delivery from 2020, the procurement office said in a statement March 12.
Defense Minister Jean-Yves Le Drian has written into his 2015 agenda an agreement for the joint venture deal in July or August, an announcement which caught some in industry by surprise. The proposed joint holding company is named KMW and Nexter Together, or KANT. The Bode family controls KMW through the Wegmann firm.
An accord in the summer, however, seems unlikely as there is a political drag effect due to Nexter’s privatization being caught up in an attempt to liberalize the ailing French economy. There is no problem on the industrial front as Nexter and KMW opened up their books for due diligence and that detailed examination of their businesses will lead to a valuation of the two companies. That scrutiny is going ahead smoothly even if the conclusion might miss the April 1 deadline, an industry source said. The due diligence allows the two shareholders to negotiate the valuation and whether amounts must be paid to bring each side to the 50:50 share in the holding company, noted Pierre Tran, DefenseNews reporter.
On the political front, France must privatize Nexter to allow the company to form the planned joint holding company with KMW. However, that will likely take longer than expected as the privatization has been written into a wide-ranging draft legislation proposed by Economy Minister Emmanuel Macron, a former investment banker who seeks to inject more competition into the domestic economy. The proposed Macron law has run into strong political resistance from both the Union pour un Mouvement Populaire conservative party and left wing of the Socialist Party. That will likely delay the joint venture agreement to the autumn, the source said.
KMW Chairman Frank Haun on January 14 told the French National Assembly defense committee the alliance would work over the next five years developing a tank – whether it be called Leopard 3, Leleo or Leoclerc – and the new heavy armored vehicle could be delivered 2025-2030 to replace the Leclerc and Leopard 2.
The Russians are working hard on tank development, and Nexter and KMW could exchange their «very interesting» technology to build replacements for the Leclerc and Leopard, Frank Haun said. Fully automated artillery, smart munitions and laser weapons are among the new weapons on which the KANT alliance would work, he added.
Nexter Chairman Philippe Burtin told the committee the SCORPION (Synergie du COntact Renforcé par la Polyvalence et l’InfovalorisatiON) Army modernization program will generate an average annual €200 million of work. The companies will have five years to see if the alliance works and if not, they can back out, Macron said.