German defense technology company Rheinmetall AG says it has concluded a purchase contract with MaxamCorp. Holding S.L. of Madrid to acquire the entire share capital of Expal Systems S.A of Madrid.
The €1.2 billion agreement was signed on November 14 and will see the Spanish ammunition maker become part of Rheinmetall in summer 2023, pending the approval of competition authorities and other regulatory checks.
In making this acquisition, the Düsseldorf-based technology enterprise said it is seeking to bolster its core weapon, ammunition and propellant business, with increased spare production capacity and an expanded product portfolio in the focus.
“In a dynamic market situation propelled by massive demand for military equipment in multiple countries, the acquisition provides Rheinmetall with swift access to significantly greater capacity,” the company said.
Rheinmetall said it wants to position itself as strongly as possible to address the anticipated inflow of new requests for tender for ammunition purchases.
Because the product spectrums of the two companies complement each other so well, the acquisition augments Rheinmetall’s existing range of products, especially in the fast-growing market for artillery and mortar ammunition as well as mortar systems.
The buyout also adds to Rheinmetall’s portfolio in the field of fuses and rocket propulsion systems, for example, as well as in medium-caliber ammunition and aircraft armament.
Rheinmetall also expects to gain a valuable strategic foothold in Spain, and thus direct access to this market. Rheinmetall also said all Expal’s operational locations, including Trubia, Burgos, Navalmoral, El Gordo, Albacete and Murcia in Spain as well as Texarkana, Texas (in the USA) would remain open.
Expal Systems S.A. expects sales in FY 2022/23 to be around €400 million. It most recently signed a contract for the delivery of 120-MX2-SM mortar systems to Lithuania.
The company’s total capacity offers scope for potential annual sales of €700 to €800 million, according to Rheinmetall.