Rheinmetall is seeking about 12 billion euros ($14 billion) from Germany to take over the country's troubled F126 frigate programme, lifting the total cost of six warships to roughly 14 billion euros, the Financial Times reported on Wednesday.
Citing people familiar with the talks, the Financial Times said Rheinmetall's naval arm laid out terms after six months of due diligence on a deal that would see it replace Dutch shipbuilder Damen on the delayed project.
Discussions on frigates have not been concluded, a German defence ministry spokesperson said on Wednesday.
The defence ministry has previously said that Damen had fallen far behind schedule on the F126 contract and that NVL, or Naval Vessels Luerssen, which was acquired by Rheinmetall in March, could step in as general contractor.
"There are extensive consultations ongoing with two large companies," a ministry spokesperson told Reuters on Wednesday.
According to the Financial Times, the offer by Rheinmetall's naval arm includes an inflation clause and a planned first-ship delivery in 2032, four years later than first planned.
Berlin is also planning to buy smaller "off-the-shelf" Meko A-200 frigates from TKMS at about one billion euros each, which one source described as leverage in the Rheinmetall talks, according to the Financial Times.
When contacted by Reuters, TKMS said it signed a preliminary contract with the German military for the delivery of the first Meko A-200 ship by the end of 2029 and to prepare the construction of four frigates.
Rheinmetall did not immediately reply to a request for comment.
(Reporting by Markus Wacket and Kirsti Knolle. Writing by Linda Pasquini and Ludwig Burger. Editing by Madeline Chambers)