Military Innovation: Leonardo and Rheinmetall Forge Strong Alliance

The European defense sector is experiencing significant movement: Italy's Leonardo and Germany's Rheinmetall have joined forces in a joint venture to develop and produce military combat vehicles. This collaboration marks the beginning of a possible consolidation within the European defense industry. Rheinmetall CEO Armin Papperger stated in a declaration that this alliance creates a new giant in European tank production. Both companies, leaders in defense technology, aim to realize ambitious projects. The joint venture primarily targets the Italian market but also has its sights set on the international market, where there is a demand for modern combat systems. The 50:50 business agreement was announced back in July, following failed negotiations between Leonardo and the French-German consortium KNDS. The decision comes at a time when European defense companies, benefiting from increased military spending post-Ukraine conflict, could experience a wave of major mergers. Leonardo CEO Roberto Cingolani emphasized that this is a significant step towards a European defense system based on specialized joint platforms. Both companies strive to develop cutting-edge technologies that are internationally competitive. Leonardo is decisively pursuing an active role in expanding the European defense sector by advocating for broader European alliances and more cooperation among defense manufacturers. Initially, the joint venture will focus on the development and marketing of the new Italian main battle tank as well as the new Lynx platform of the Armoured Infantry Combat System (AICS) program for the Italian Army. The Panther KF51, developed by Rheinmetall, will form the basis for the new main battle tank, which is set to replace the Italian Army’s Ariete tank. Both partners also see extensive sales opportunities for their joint products in international markets. The first orders from the Italian government are expected either by the end of the year or in the first quarter of 2025. The headquarters of the joint venture will be in Rome, with additional operational sites in the port city of La Spezia. Approximately 60% of the activities are expected to be conducted in Italy.