R/€ = 14.34
R/$ = 10.68
Au 1294.20 $/oz
Pt 1463.50 $/oz
Feb 08, 2008
German firm to buy controlling stake in Denel MunitionsBack
Defence|Denel|Denel Munitions|Rheinmetall Group|Systems|Rheinmettall Denel Munition|Defence Group|Local Aerospace|Systems|North Atlantic Treaty Organisation|Armin Papperger|Lana Kinley|Monwabisi Kalawe
© Reuse this German defence giant Rheinmetall Group signed an agreement, on Friday, with local aerospace and defence group Denel, which marked Rheinmettal's intention to take a 51% equity stake in Denel Munitions.
Denel group executive Lana Kinley said that it would still be a few months before the deal came into effect as it was still subject to approval from the competition authorities, and was still tied to various suspensive conditions that had to be resolved.
Both shareholders would be contributing to the transaction, however, Kinley did not disclose the amounts. The name for the new consolidated business was likely to be Rheinmettall Denel Munition.
Kinley commented that the transaction was "another step in our [Denel's] turnaround strategy" and that from a financial and operational perspective there had been some improvement, thanks, in part, to equity transactions such as this.
Denel Munitions CEO Monwabisi Kalawe said that the equity partnership had been a "natural progression in the growing relationship" between the two companies.
Kalawe explained that, through the transaction, Denel Munitions would benefit from further market growth in North Atlantic Treaty Organisation countries, consolidation and improvement of production at its operations, transfer of technology and skills development and training.
Kalawe noted that reciprocally, Rheinmettal would gain from Denel's ‘highly reputed' artillery systems, modular charge systems and propellants, and its establishment in South American, Middle Eastern and Far Eastern markets.
The Denel Munition facilities were said to be running at low utilisation levels and this was one of the key drivers of the partnership.
Kinley said that Denel Munitions was currently operating off seven sites with very high fixed costs and that the transaction would see a consolidation of these operations sizing them down to about three sites. When asked about the potential for job losses, Kinley said that the intention was to grow the business, rather than have to retrench employees.
She noted that Denel had not yet concluded its turnaround strategy as it was still a loss-making business and it would take some two to three years before it achieved a "break-even" financial status.
Kinley and Rheinmetall Waffe Munititon president Armin Papperger signed the agreement on Friday in Tshwane.
Edited by: Mariaan Webb© Reuse this Comment Guidelines (150 word limit)
Updated 7 hours ago While the global economy continues to battle growth headwinds as it slowly emerges from a lingering post-recessionary phase, the greatest inhibitors to South African economic development are largely domestic and within government’s control, Finance Minister...
Updated 7 hours ago Building materials firm Infrasors said on Friday that FD Marius Potgieter, who had occupied the position since July 1, 2009, had tendered his resignation and would leave the company with immediate effect. Construction supplies manufacturer Afrimat FD and Infrasors...
Updated 7 hours ago Telecommunications group Telkom on Friday announced that, following extensive facilitated consultations and deliberations, management and organised labour had reached consensus that the company’s current restructuring process would proceed. “The parties have...
Recent Research Reports
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
Real Economy Insight: Road and Rail 2014 (PDF Report)
This six-page brief covers key developments in the road and rail industries over the past 12 months, including details of South Africa’s road and rail network and prospects for both sectors.
Real Economy Insight: Steel 2014 (PDF Report)
This four-page brief covers key developments in the steel industry over the past 12 months. It provides an overview of the global and South African steel and stainless steel markets, South Africa’s major steel producers and events that have shaped these markets.
This Week's Magazine
South African construction company Group Five says work on the rehabilitation of the 800 km stretch of the Plumtree–Mutare highway, in Zimbabwe, should be completed by the end of this year. Giving evidence before the Parliamentary Porfolio Committee on Transport...
The Space Operations division of the South African National Space Agency (Sansa) revealed on July 17 that it had supported the successful launch of the US National Aeronautics and Space Administration’s Orbiting Carbon Observatory-2 (OCO-2) satellite on July 2. The...
Phase 1A of Johannesburg’s Rea Vaya bus rapid transit (BRT) system should carry around 42 000 people a day, while it was been expected that Phase 1B, rolled out last year, would add another 60 000 daily passengers. However, the entire system is currently carrying...
A stormwater project in Bedforview, east of Johannesburg, has stalled for eight months after project managers in the Ekurhuleni municipality resigned and municipal managers were placed on special leave without designating replacements. Construction to reinforce the...
The design of the Beit Bridge border post is the biggest impediment to efficient freight movement between Zimbabwe and South Africa, says Cross-border Road Transport Agency CEO Sipho Khumalo. Beit Bridge is the busiest border post in Africa. A research study on the...