German arms maker Rheinmetall is considering further acquisitions in the naval sector after agreeing in September to buy the warship division of German shipbuilder Luerssen for €1.35 billion ($1.57 billion), CEO Armin Papperger said.
The long-awaited consolidation in Germany's naval sector has accelerated with a surge in defence spending. Germany alone could spend about €31 billion on naval vessels by 2035, according to Rheinmetall.
"We have entered the naval business, and we obviously aim to grow. And if we see good opportunities, we also aim to grow through acquisitions," he told Reuters on the sidelines of a Handelsblatt conference in Berlin.
Papperger declined to specify potential acquisition targets but industry sources have suggested Europe's biggest ammunition maker may be interested in German Naval Yards Kiel (GNYK).
Submarine and frigate maker TKMS is currently in talks with GNYK and expects to decide soon on whether to buy the neighbouring shipyard.
Papperger played down talk of Rheinmetall eyeing GNYK.
"I don't know anything about this right now. There's somebody else who says he seeks to buy them. We are not in negotiations as we speak."
Asked whether Rheinmetall might be interested in GNYK, he said: "We will see."
The CEO said that Rheinmetall was well on its way to close the Luerssen deal, and that he expected European antitrust authorities to sign off on it before the end of January.
Rheinmetall, which has been best known for making tank cannons, artillery shells and infantry fighting vehicles, has diversified its defence business since Russia's invasion of Ukraine in 2022.
The German defence industry is benefiting from a surge in defence spending, driven by shifting US foreign policy that is putting greater pressure on Europe to boost its own defences against Russia.
On Thursday, Papperger said Rheinmetall expected a potential order intake of €80 billion ($93.54 billion) in 2026, citing government procurement plans for the Boxer APC, an armoured fighting vehicle, the frigates F126 and F127, and an additional batch of Puma infantry fighting vehicles.
Papperger said the Boxer order alone had a volume of €37.7 billion, and the orders for the frigates amounted to €12-13 billion.
(Additional reporting by Tom Kaeckenhoff and Matthias Inverardi in Duesseldorf. Editing by Jane Merriman)