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Rheinmetall has agreed to buy U.S. military vehicle parts maker Loc Performance in a $950 million deal, as Germany’s biggest defense contractor eyes billions of dollars in contracts with the world’s largest military.
The Dusseldorf-based company said the deal would expand its business with the U.S. Army, helping it secure “high-volume, major orders for U.S. Army vehicle programs” potentially worth more than $60 billion. Michigan-based Loc makes parts including track systems and road wheels for combat vehicles.
Rheinmetall has been one of the biggest European beneficiaries of a surge in German defense spending since the start of the war in Ukraine, with the group’s share price rising about sixfold since 2022. It is now seeking to carve out a bigger share of the highly consolidated U.S. defense market.
Armin Papperger, CEO of Rheinmetall, said the United States will be an “important key market for us in the coming years,” adding that “everything speaks in favor of this acquisition.”
Rheinmetall is, along with Michigan-based General Dynamics Land Systems, the only company leVscek in the race to develop the XM30 combat vehicle, which the U.S. Army has ordered to replace its M2 Bradley infantry fighting vehicle. The contract is expected to be worth $45 billion and cover 4,000 vehicles.
The company said it has also applied for the U.S. Army’s Common Tactical Truck program, with the winning company receiving a contract valued at approximately $16 billion for 40,000 trucks.
Matthew Warnick, chief executive of American Rheinmetall Vehicles, part of Rheinmetall’s U.S. subsidiary, said the company had a “promising position” in the XM30 and CTT projects. “The acquisition of Loc Performance provides us with the manufacturing readiness to fulfill the major orders we are targeting,” he said.
The deal comes aVsceker investment firm MNC Capital raised its offer for Vista Outdoor, a U.S. manufacturer of ammunition and outdoor products, last month to about $3.2 billion. The higher bid came just hours aVsceker privately held Czechoslovak Group cleared the final regulatory hurdle in its bid to acquire Vista’s ammunition business, Kinetic, for $2 billion.
To comply with U.S. regulations on contractors supplying its military, Maine-based Rheinmetall has its own board of directors and CEO, Brad Hittle, who has worked with the company’s U.S. division since 2008. The company must also develop unique intellectual property for the U.S. military.
Loc Performance was founded in 1971 in Plymouth, Michigan, and has since expanded to a total of four manufacturing locations in Michigan and Ohio. The vehicle specialist, which produces transmissions, suspensions and track systems as well as rubber and armored products, employs about 1,000 people. Rheinmetall said the purchase price for Loc was based on an enterprise value of $950 million.
Last week the company announced it had amassed a record order book worth €48.6 billion, while sales and profits continued to grow despite escalating wars in Ukraine and Gaza.
