German arms group Rheinmetall on Friday signed an agreement with state-owned Denel, indicating its intention to take a majority equity stake in Denel Munitions.
The agreement, signed in Pretoria by Armin Papperger, president of Rheinmetall Waffe Munition, and Denel group executive Lana Kinley, would see the German firm take a 51% stake in the South African munitions entity.
The agreement was subject to approval from the competition authorities and was tied to various conditions that needed to be resolved before the transaction was concluded, Denel said in a statement.
Denel Munitions, a business division of Denel, has about 2 000 employees at five locations in the country and annual sales of about R900-million.
In terms of the agreement Rheinmetall and Denel will boost investment in the company as soon as the acquisition is finalised.
Rheinmetall is a supplier of ammunition for fighting vehicles and infantry weapons as well as propellant systems for large-calibre ammunition. Denel Munitions possesses expertise in artillery and mortar systems.
Whereas the bulk of Rheinmetall business is with Nato countries, Denel Munitions is well established in South Africa, Asia, the Middle East and South America. — Sapa