The German government is considering a new strategy to boost the country’s defense industry, which could include buying stakes in arms companies and defense projects in “strategic cases”. The draft plan, developed by the Ministries of Economy and Defense, was presented on Thursday, the Handelsblatt newspaper reported.
Under the plan, the German government can more often buy stakes in companies and projects deemed strategically important. Although such actions are already permitted, the new approach could significantly increase the share of government participation in defense-critical sectors.
The spokesman of the Ministry of Economy confirmed that the document is not yet final. However, it is already known that the German government owns a 25% stake in German defense electronics manufacturer Hensoldt, according to data from the London Stock Exchange Group (LSEG).
In June, it was reported that German state lender KfW and private equity firm Carlyle were in talks to jointly acquire a stake in Thyssenkrupp’s warship division. It is expected that the deal could be completed in September if all parties reach an agreement.
Since the Russian invasion of Ukraine in February 2022, defense spending in Germany and other European countries has increased significantly. It also led to a rise in orders and the market value of arms manufacturers such as Rheinmetall and Hensoldt.
The draft plan also provides recommendations for the development of key technologies, improving the financial base of the defense industry and simplifying regulatory procedures, which aims to increase the efficiency and competitiveness of the German defense industry.
