The deal between France’s Nexter Systems and Germany’s Krauss-Maffei Wegmann (KMW) creating a joint venture currently known as Newco will be completed on 15th December. With a turnover of around €1.6bn and 6,000 employees Newco will be the world’s third largest land-defence group in terms of turnover behind General Dynamics and BAE Systems. So this week has seen a flurry of activity to set the scene for the final act given that Newco, whose official headquarters will be in the Netherlands (just like Airbus), will have two chief executives: one French, one German.
First a bit of background: Nexter Systems together with its sister companies Eurenco and SNPE are currently held 100% by the holding company Giat SA which was, until the 18th November, a wholly-owned French state enterprise. Philippe Burtin, 64, was CEO not only of Giat but also of the three sister companies.
Yesterday, 8th December, Burtin confirmed to a Giat SA board meeting that he was resigning from all these positions. According to reports by the Nexter CFDT trade union, Stéphane Mayer, 52, will be the next CEO of Nexter Systems from 15th December and thus co-CEO of Newco. He is currently CEO of Daher-Socat, an aircraft manufacturer of the TBM family, and equipment supplier to Airbus, Dassault, Gulfstream etc.
Thierry Dissaux, 56, will head GIAT, SNPE and Eurenco from 17th December. He is currently the CEO of the Fonds de Garantie des Dépôts (Deposit guarantee Fund).
On the German side, KMW was formed in 1999 when Krauss-Maffei and Wegmann merged their defence activities and has been, since 2011 when Siemens sold its 49% stake in KMW for an undisclosed amount to the Wegmann group, under the private ownership of the extremely discreet Bode family under the leadership of Manfred Bode. It is likely that Frank Haun, current CEO of KMW, will be the other co-CEO of Newco.
Announced on 1st July 2014, the historic merger is the first in the European defence sector since MBDA was created to form a European missile giant in 2001, and EADS (now Airbus) was formed in 2000.
In order for the deal to go through, France had to privatise at least 51% of Giat. That is now done and on 17th November a decree (n° 2015-1482) was published creating a Golden Share for the French state giving it particular rights in order to protect France’s essential interests in the sector of weapons systems and large and medium calibre munitions, notably the competences, know-how and industrial capacities indispensable for the development, qualification, production, testing and integration of these systems and munitions which mean the whole munition chain is mastered.
As part of the procedure to ensure this and that each of the partners can continue to export without fear that the other will block the deal, a joint declaration was issued today, 9th December, by the French and German governments stating that they both supported this strategic cooperation between KMW and Nexter Systems and that such narrow industrial cooperation required regular meetings on defence industry strategy so that “each nation’s respective interests” can be defended “in a framework of industrial consolidation and modernisation.”
The declaration added that important decisions regarding military and defence industry technology would be discussed, and stated that it was important to have key industrial technologies located in France and Germany to maintain not only know-how but also employment. They added that they would seek greater convergence in their military and operational needs and would work to harmonise the way military materiel and weapon systems are qualified, but that this did not exclude cooperation with other partners.
The two governments said the strategic cooperation between their two land armaments’ groups was “an important step towards an intensification of Franco-German cooperation, the aim being to preserve and strengthen their competitivity and technological capacities as well as the European potential for innovation in the field of security and land defence.”
Meanwhile, the Nexter CFDT trade union revelealed that Newco’s Board of Trustees will be chaired by Christian Jourquin, 67 (CEO until May 2012 of Solvay, a Belgian chemical and pharmaceutical company). The two independent trustees, one for France and one for Germany, are: Antoine Bouvier, 56 (CEO of MBDA, the European missiles group) and Utz-Hellmuth Felcht, 68, (Managing Director of One Equity Partners until July 2014). Those representing Giat are Jean Everin Deckers and Bertrand Le Meur while representing KMW are Manfred Bode and Axel Arendt.