Maker of the Leclerc tank Nexter will merge with German firm Krauss-Maffei Wegmann

Merger of German and French tank makers given go ahead

The makers of Germany's Leopard and France's Leclerc tanks will complete their long-planned merger on Wednesday.

The deal between French state-controlled Nexter Systems and privately-held Krauss-Maffei Wegmann of Germany had been held up by the need for a change to French law to accommodate the deal, which took effect on July 9.

The two firms have been in talks for more than a year, but another reported sticking point was German vice-chancellor Sigmar Gabriel's preference for an all-German merger of KMW, with automotive and defence group Rheinmetall designed to save jobs.

KMW and Nexter each employ over 3,000 people worldwide. KMW supplies wheeled and tracked fighting vehicles to 30 nations while Nexter is a maker of systems, ammunition and equipment with sales of €1.05bn (£740m) last year.

"Nexter Systems and KMW will benefit from each other's commercial clout," according to a government document explaining the recent law change, which cited complementary products and the potential for research and development cooperation.

The merger should help the new company to compete with competitors like Britian's BAE Systems, maker of the Challenger tank and General Dynamics of the United States which makes the Abrams.

The merged company will be 50 per cent owned by the French government through GIAT Industries and 50 per cent by the Bode-Wegmann family, which owns KMW, according to the document.

The document also says the law change allows for the privatisation of GIAT Industries, but would guarantee the jobs of Nexter employees.

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