German firm sees U.S. getting lion’s share of 100 billion euro military fund

FILE PHOTO: A view of a Leopard 2 tank at the German army Bundeswehr base in Munster

Alexander Hübner Tue, July 4, 2023, 10:31 AM EDT

By Alexander Hübner

MUNICH (Reuters) – Up to half of the 100 billion euro ($109 billion) special fund set up to modernize the German military will likely go to U.S. defence companies, a leading tank gear box maker said, accusing Berlin of lacking a strategy for its defence industry.

“I don’t believe that much of the money will be left over for the German industry,” Susanne Wiegand, chief executive of Renk Group, told reporters in Munich, adding the government in Berlin did not realise the strategic importance of the defence industry.

“Germany does not have a strategic compass for the defence industry. This is something the French are handling much better,” she said late on Monday at a journalist briefing embargoed for Tuesday.

Wiegand called on the government to use the 100 billion euro fund not only to plug short-term gaps in the German military’s inventories but also to help develop technologies of the future.

The chancellery in Berlin did not immediately respond to a Reuters e-mailed request for comment.

Renk, formerly a subsidiary of Volkswagen, is global leader in the production of gear boxes for tanks including the Leopard 2.

The company, situated in the Bavarian town of Augsburg, makes about 70% of its sales from gear boxes for tanks and navy ships, the rest with gear boxes for civilian purposes such as compressors.

Three years after VW sold Renk to financial investor Triton for 700 million euros, the company is preparing for a stock market flotation.

“I see the capital market as a next step in our development but nothing has been decided yet,” Wiegand said, without giving a date for a potential listing.

Renk has booked orders totalling of 3.9 billion euros ($4.3 billion), including framework contracts, according to the CEO.

Bankers estimate Renk’s value to be around 2.5 billion euros in case of an IPO.

($1 = 0.9175 euros)

(Reporting by Alexander Hübner; Writing by Sabine Siebold; Editing by Rachel More and David Holmes)

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