ROME/BERLIN (Reuters) – Italian defense group Leonardo and German peer Rheinmetall have agreed to form a business to produce tanks and other defense systems, the two companies said on Wednesday.
The first goal of the 50-50 business, which will be headquartered in Italy, will be to develop the Italian Main Battle Tank and the Armored Infantry Combat System of the Italian Army, they said in a joint statement.
Earlier on Wednesday, German business daily Handelsblatt reported that the Italian government planned to buy hundreds of tanks from Rheinmetall in what would be the group’s largest ever order, worth around 20 billion euros ($21.50 billion ) over a period of 15 years.
Italy’s Ministry of Defense was not immediately available for comment.
“The technology and industrial collaboration between Leonardo and Rheinmetall is a unique opportunity to develop Main Battle Tanks and infantry vehicles,” said Leonardo CEO Roberto Cingolani after the agreement.
“This agreement takes us as an important step in the construction of the European security area.”
Rheinmetall CEO Armin Papperger said the companies aim to “open the door to a new generation of modern combat vehicles in Europe and Europe.”
The final assembly lines, homologation tests, delivery of works and logistic support will be based in Italy, which will account for 60% of the work done, said the joint statement.
Leonardo said last month that negotiations for a tank alliance with the Franco-German consortium KNDS broke down, but he is still determined to develop a new generation of armored vehicle platforms for the Italian Army.
Soon after, a person close to the matter told Reuters that Leonardo was in talks with Rheinmetall about a strategic alliance for tanks.
In November, Cingolani said his company wants to focus on European alliances and create regional giants.
Rheinmetall is aiming for record sales of 10 billion euros this year as its order books swell due to increased defense spending in Europe in response to the war in Ukraine.
According to a Handelsblatt report, Rome will buy at least 350 Lynx armored fighting vehicles and more than 200 Panther main battle tanks in an order spread over a period of 15 years.
Rheinmetall did not deny the report when asked for comment and said it would comment later.
Shares in Leonardo were up 3.7% by 1332 GMT, while Rheinmetall was up 4.8%.
($1 = 0.9312 euros)
