DÜSSELDORF/BREMEN (dpa-AFX) - Germany's largest defense group, Rheinmetall, will now also be building ships. The manufacturer of tanks, artillery, and ammunition announced in Düsseldorf that it has completed the acquisition of the Bremen-based naval company NVL. All antitrust approvals have been received. The seller is the Bremen shipyard group Lürssen, which will now focus solely on selling yachts and has divested its naval subsidiary. The purchase price remains confidential.

The acronym NVL stands for Naval Vessels Lürssen; the company employs 2,100 people. For the past year, Rheinmetall expected NVL to generate sales of 1.3 billion euros and an operating profit (Ebit) of ten percent; by 2030, the target is five billion euros in revenue with a 15 percent Ebit margin. Rheinmetall itself has around 40,000 employees and aimed to achieve well over 12 billion euros in sales in 2025—the annual figures of Germany's largest arms manufacturer will only be published in the middle of this year.

Four Shipyards Change Hands

Rheinmetall and Lürssen had already announced an agreement last September. The antitrust clearance from various authorities took longer than expected. NVL, in addition to its administrative headquarters in Bremen, operates four shipyards: one in Wilhelmshaven (Lower Saxony), two in Hamburg, and one in Wolgast (Mecklenburg-Western Pomerania). NVL builds ships for the German Navy and navies of other countries, as well as for government agencies. Its product portfolio includes frigates, corvettes, patrol boats, supply ships, and minehunters.

The new owner, Rheinmetall, aims to significantly expand its shipbuilding business. The defense group is targeting an annual revenue increase of about 30 percent for its new naval division, which would reach around five billion euros by 2030. Of this, Rheinmetall estimates three billion euros will come from Germany and two billion euros from abroad, including countries such as Italy, Greece, and Turkey.

"In future, Rheinmetall will be a relevant player on land, at sea, in the air, and in space, thus developing into a cross-domain systems house," said CEO Armin Papperger. This will create "a powerful full-service provider for state-of-the-art surface vessels."

Rheinmetall also sees promising business opportunities for ships in the United States, as there is believed to be a lack of shipyard capacity there. Indonesia, Singapore, and New Zealand are also expected to purchase ships from Germany.

Billions Ready for the Military

The reason for this strong growth potential is the tense geopolitical situation and the determination of NATO and other countries to invest more money in their militaries. Germany is likely to invest billions in its army, air force, and navy in the coming years. The federal government's purse strings are relatively loose, as these expenditures are largely exempt from the debt brake.

Rheinmetall is convinced it has made a good move with the NVL acquisition. In a conversation with analysts last year, CEO Armin Papperger pointed out that competitors such as TKMS from Kiel, BAE Maritime from Great Britain, Financtiere from Italy, Naval Group from France, and Damen Naval from the Netherlands were less profitable. A unique opportunity had arisen, which the company seized.

An industry insider, who wishes to remain unnamed, sees Thyssenkrupp subsidiary TKMS as the loser in this transaction. In the past, there were several attempts to forge close cooperation between Lürssen and TKMS. "A consolidation of shipyards in Germany was in the air—and now, of all companies, Rheinmetall is stepping in, despite not having its own shipyard until now."

For Rheinmetall, the acquisition is also beneficial because it can offer more in future sales talks: "Until now, Rheinmetall was only a supplier of weapon systems and electronics in the naval business; in the future, it can sell everything as a complete package, including the ships." Having in-house shipbuilding expertise will also facilitate the development of weapons for the high seas./wdw/DP/stw