German weapon manufacturer Rheinmetall has reached a deal with MaxamCorp to take over the entire share capital of Spanish ammunition maker Expal Systems.

The agreed purchase price of the acquisition is based on an enterprise value of €1.2bn.

The transaction is intended to expand Rheinmetall’s strategic foothold in Spain.

Rheinmetall will continue to maintain Expal’s present business operations, staff, and technology across different locations including El Gordo, Trubia, Navalmoral, Burgos, Albacete, and Murcia, in Spain, along with Texarkana and Texas in the US.

The acquisition will also allow Rheinmetall to strengthen its core weapon, ammunition, and propellant businesses in a sustained manner. 

The addition of Expal will also allow Rheinmetall to handle the potential inflow of new tenders for ammunition purchases by increasing its production capacity.

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With enhanced spare production capability, Rheinmetall can also build an expanded product portfolio.

The existing product line of the Spanish ammunition maker and Rheinmetall complement each other and will eventually drive growth for Rheinmetall, especially in the artillery, mortar ammunition, and mortar systems businesses.

Apart from weapons and ammunitions, the deal will allow Rheinmetall to grow its footprint in the industry of rocket propulsion systems and fuses, as well as medium-calibre ammunition and aircraft armament.

The next steps will involve obtaining all the required regulatory approvals and assessments from the associated competition authorities.

The companies are expected to close this transaction by summer next year.

Expal Systems is currently expecting sales of €400m in fiscal year 2022-23 while the company’s overall capacity for potential annual sales is between €700m and €800m.

In 2019, Rheinmetall finalised a transaction to acquire operational assets of IBD Deisenroth Engineering.