Canada has picked Germany's TKMS to build 12 submarines for its navy, The Globe and Mail reported on Monday, deepening defence ties with Europe ahead of a NATO leaders' summit centred on higher military spending.
The announcement will be made before Canadian Prime Minister Mark Carney heads to the two-day summit in Turkey starting on Tuesday, the report said, citing sources.
The Prime Minister's Office did not respond to a request for comment. Carney was due to make an announcement related to security in Halifax on Monday afternoon. The German Embassy in Ottawa and the office of Canadian Defence Minister David McGuinty both declined to comment.
TKMS, majority-owned by German conglomerate Thyssenkrupp, is offering its 212CD class submarine model in the tender, which it is also supplying to Norway's navy under a joint development programme.
Shares in TKMS rose as much as 12.9 per cent on the news, hitting their highest level in nearly four months.
Canada, under pressure from the United States to increase defence spending, has said it hit NATO's military spending target of two per cent of GDP earlier than originally planned. NATO leaders have agreed to spend five per cent of GDP on defence and security-related investments by 2035.
At a defence show in May, Carney said that both the submarines proposed by Germany and South Korea's Hanwha Ocean met the needs of the Canadian Navy and that the winning bid would likely depend on the economic benefits being offered.
Carney pledged in his February defence industrial strategy that Canada would buy military equipment from allies, "that spur reinvestment into the Canadian economy," and ensure "sovereign control over the operation and sustainment of the newly acquired assets."
Hanwha Ocean did not immediately respond to a request for comment. Going with South Korea would reflect Carney's goal to increase trade and business ties with Asia.
With its diamond shape, length of around 74 metres (243 feet) and non-magnetic steel, TKMS hopes the 212CD will become the new NATO standard.
TKMS CEO Oliver Burkhard told Reuters in January that it was in talks with Norwegian and German companies to offer a multi-billion dollar investment package spanning rare earths and battery chemicals to win the tender.
Burkhard told Canadian media TKMS could deliver four 212-CD submarines to the Canadian Navy by 2036, while Hanwha had promised delivery a year earlier.
(Reporting by Maria Cheng, Friederike Heine, Caroline Stauffer, Katharine Jackson, Christoph Steitz and David Ljunggren; Writing by Caroline Stauffer; Editing by Howard Goller)
