Cheetah ammunition for Ukraine: Rheinmetall buys Expal Systems

Anti-aircraft gun tank Gepard

With the acquisition of Expal, Rheinmetall will be able to produce more ammunition for the cheetah in the future and also supply it to Ukraine.

(Photo: dpa)

Berlin, Dusseldorf The armaments group Rheinmetall is reacting to the increasing demand for ammunition and is taking over the Spanish competitor Expal Systems for 1.2 billion euros. The company announced this on Monday. After the outbreak of war in Ukraine, global demand increased significantly, CEO Armin Papperger told the Handelsblatt.

With an annual turnover of around 400 million euros, Expal System is one of the largest ammunition manufacturers in Europe. According to CEO Papperger, the capacities are sufficient to further increase sales to up to 700 million euros. The plants are modern and highly automated.

The Spaniards produce, among other things, ammunition for artillery systems and anti-aircraft guns. Papperger said that Expal could produce 250,000 to 300,000 artillery shells per year. Rheinmetall itself has a capacity of around 80,000.

Cheetah ammunition for Ukraine could soon come from Spain

According to Papperger, ammunition for the anti-aircraft tank Gepard can also be manufactured at Expal in the future. The German government also supplied the tanks to Ukraine to protect its airspace against attacks from Russia. The supply of ammunition is limited, however, because Switzerland, the manufacturing country, does not want to issue an export license.

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The production of ammunition will be one of the most important topics for Rheinmetall in the coming years. After the end of the Cold War, many Western countries had emptied their arsenals and are now looking to replenish them.

The Bundeswehr also only has a very limited supply of ammunition. The federal government plans to replenish the stocks and, according to information from politicians, to spend up to around 20 billion euros.

Rheinmetall ammunition at an armaments fair

The armaments company takes over the Spanish ammunition manufacturer Expal Systems.

(Photo: Getty Images)

The purchase price for Expal Systems is three times its current sales. According to Rheinmetall CEO Papperger, the expected earnings before taxes, interest, depreciation and amortization (Ebitda) of around 200 million euros justify the high valuation. In addition, there is the expectation that the business will grow strongly.

Rheinmetall prevailed in the auction against some other arms suppliers, as a person familiar with the process said. The seller is the private equity company Rhone, which Maxam bought in 2019 and which is now enjoying high demand for Maxam products and thus a high valuation when it is sold.

Investors reacted positively to the purchase: Rheinmetall’s share price rose by more than eight percent by the afternoon.

More: Less autocrats, more in crisis areas – How Habeck wants to turn arms exports inside out

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