KMW, Nexter closer to merger

German cartel authorities on Monday green-lighted a planned merger between the makers of Leopard and Leclerc tanks, KWM and Nexter.

The Federal Cartel Office announced that it had approved the two companies' plans to pool their resources into a 50-50 joint venture.

"The object of our investigation was to ascertain whether effective competition on the two markets concerned would be substantially disrupted, but this is not to be expected," a statement released by the cartel office said.

One more hurdle to clear

The merged entity would have combined annual sales of around 2 billion euros ($2.3 billion) and a workforce of 6,000, making it a European military equipment production giant. But it would still rank behind the US' General Dynamics, Britain's BAE Systems and Oshkosh Defense of the United States in terms of sales.

The German regulators only looked into competition-relevant aspects of the planned tie-up. Their approval of the deal does not mean it will come about right away.

The final word will be with the German Economy Ministry, which is to assess the impact the merger could have on the country's defense export guidelines. Critics of the deal fear the tie-up could be used by KWM to circumvent arms export regulations in place in Germany, which are more restrictive than those of France.

The ministry has until September 10 to reach a decision.

hg/nz (AFP, Reuters, dpa)