German defense firm Rheinmetall AG has acquired Spanish ammunition developer Expal Systems.
The 1.2-billion-euro ($1.2 billion) acquisition will see Expal become Rheinmetall’s core ammunition, propellant, and weapons business.
By acquiring Expal, the German company will have a wider product portfolio and be integrated with sustainable methods for developing military capabilities with increased spare production capacity.
“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,” a statement from Rheinmetall said.
“Given the expected large increase in demand from numerous nations, Rheinmetall wants to position itself as strongly as possible to address the anticipated inflow of new requests for tender for ammunition purchases.”
According to Rheinmetall, the buyout will enhance the company’s expertise in its existing range of products with fast-growing markets, including mortar ammunition and mortar systems.
It will also enable Rheinmetall to extend its business to fields such as rocket propulsion, fuses, medium-caliber ammunition, and aircraft weaponry.
Furthermore, the German company’s dependence on separate suppliers is expected to lessen due to Expal and Rheinmetall’s similar product spectrum.
“In important areas like purchasing and sales, synergies will have a positive impact on costs, which will also benefit customers,” Rheinmetall explained.
“Thanks to this acquisition, Rheinmetall is gaining a valuable strategic foothold in Spain, and thus direct access to this important market.”
“Rheinmetall sees maintaining the company’s existing technology and staff as essential; all operational locations (Trubia, Burgos, Navalmoral, El Gordo, Albacete and Murcia in Spain as well as Texarkana, Texas in the USA) are therefore to remain open.”
Rheinmetall said Expal Systems expects sales in 2022 to 2023 of around 400 million euros ($416 million).
Expal’s most recent milestone is a towed 120mm mortar contract with Lithuania.
The company’s total capacity has potential annual sales of 700 million to 800 million euros ($729 million to $833 million).