Darrois Villey Maillot Brochier advises Krauss-Maffei Wegmann on its merger plan with NEXTER

Darrois Villey Maillot Brochier intervened in support of Krauss-Maffei Wegmann (KMW) in its proposed alliance with Nexter Systems (Nexter), both recognized as leading European providers of land defense systems. On 1st July 2014, the owners of the German and French companies signed in Paris a memorandum of understanding in this regard. The alliance between the two groups which will take the form of a joint holding company paves the way towards a Franco-German group of defense technology with an annual turnover of nearly 2Bn €, an order book of about 6Bn €  and more than six thousand employees.

KMW, Nexter and their respective shareholders consider this a decisive step for the consolidation of the defense industry in Europe. Their strategic convergence facilitates the preservation of jobs and skills within European Union. The products portfolios of the two companies and their commercial presence in various parts of the world are complementary. The alliance between KMW and Nexter will establish a group with the strength and the innovative capability required to succeed and to develop in a competitive international environment. Moreover, this alliance would also offer clients within the European Union or NATO members advancement prospects in terms of standardization and interoperability of their defense equipment, with an industrial basis on which to rely on.

Nexter Systems SA is wholly owned by Giat Industries SA, a publicly listed company; Krauss- Maffei Wegmann GmbH & Co. KG is wholly owned by Wegmann GmbH & Co, based in Kassel (Hesse). It is envisaged that the merger between the two companies will involve the transfer by current shareholders of their shares to a jointly-owned company constituted for such purpose. They will in turn each receive 50% of the shares of this joint holding company which shall be the sole shareholder of Nexter and KMW. The governance of the joint holding company will take into account the parity between its two shareholders, which will be the reference investors of the new combined group with a long-term industrial perspective.

It is expected that the merger will occur in the first months of 2015. In the meantime, a diligence process of the two entities will be carried out. The proposed alliance will be subject to the usual regulatory and legal authorizations.