Further Consolidation of the European Land Weapons Business: KNDS Acquires Texelis

01/31/2025

By Pierre Tran

Paris – The French unit of KNDS and Texelis have signed an outline agreement on the acquisition of the builder of powertrains for armored vehicles by the manufacturer of land weapons, KNDS said in a Jan. 29 statement.

“On January 29, 2025, KNDS and the shareholders of Texelis signed a Memorandum of Understanding (MOU) concerning the proposed acquisition by KNDS France of Texelis’ Defense business,” KNDS said in the statement.

“Under this agreement, the two parties announce that they are entering into exclusive negotiations with a view to carrying out this transaction, which will require the separation of Texelis into two companies – Texelis Défense and Texelis Transport,” the company said.
KNDS France and KNDS Deutschland are the partners of the Franco-German KNDS group which builds heavy tanks and artillery. The former previously traded as Nexter, while the latter was known as Krauss-Maffei Wegmann.

Texelis is joint prime contractor with KNDS France on the Serval, a light version of an armored personnel carrier, part of the French army’s Scorpion modernization program.

The acquisition deal was expected to be completed by the end of this year, with the timing set by formally splitting the Texelis business into military and civil units, and meeting regulatory requirements, a source close to the deal said.

No details were given on the price of the planned deal. Texelis reported 2023 sales of some €110 million ($115 million), and expected to post 2024 sales of €120 million.

The agreed deal marks a further step in the consolidation of European land weapons, following the acquisition last year of Arquus, a French builder of light armored vehicles, by a Belgian company, John Cockerill.

“John Cockerill announces today the conclusion of the acquisition process of Arquus, the main French supplier of military vehicles, which began last January with the Volvo Group,” the Belgian supplier of gun turrets said in a July 2, 2024 statement.

France and Belgium backed that cross-border acquisition, with Paris and Brussels each taking 10 pct of the capital of John Cockerill Defense, the Belgian company said.
Volvo, a Swedish truck company, sold off Arquus, after setting a reported price tag of an initial €300 million and a final price pegged to performance over 18-24 months.

Texelis supplies powertrains, or mobility packages, including a Cummins engine, Allison gearbox, Michelin tires, suspension, and axles for the Serval armored vehicle. That mobility package is branded as Celeris for export markets.

Complementarity Acquired

The acquisition of Texelis was delivering a “complementarity” for the French KNDS unit, bringing inhouse the mobility package for armored vehicles, the source said.

Texelis was bringing “a real know-how,”  the source said, including hybrid, or diesel-electric, propulsion. This technology could be applied to the fleet of KNDS armored vehicles.
An analyst said the planned acquisition would bring the Serval program fully inhouse to KNDS France, and bring back a “crucial” industrial capability ceded some 30 years ago.

KNDS France, previously trading as Giat, built powertrains for the AMX10 RC reconnaissance and combat vehicle, and Vextra, an armored vehicle which failed to find a buyer. Giat, renamed as Nexter, went on to rely on suppliers such as Texelis, Tatra, and Mercedes for powertrains.

The acquisition was effectively a “vertical integration,” the analyst said. Arquus worked with KNDS as supplier and designer on the Griffon troop carrier and Jaguar combat and reconnaissance vehicle, while Texelis supplied Arquus as a subcontractor.

Once KNDS becomes its parent company, Texelis will be both a supplier, through Arquus, and subsidiary to KNDS.

Arquus receives some 40 pct of value on the Griffon, and five to 10 pct on the Jaguar. The company supplies the remote-control machine gun on the former, and driveline on the latter.

Texelis had previously been a subcontractor, but won a joint prime contractorship on the Serval with KNDS France.

Texelis Sees Security

For Texelis, there was a view the acquisition secured the Serval program and brought economic stability, a second source close to the deal said. The acquisition was seen as delivering a quality team, products which worked, and high profitability.

The present management would stay in place, the second source said.

For KNDS France, the acquisition could be seen as broadening business beyond the project for a main ground combat system (MGCS), the second source said. One possibility would be KNDS setting up a KNDS mobility unit, working on mobility packages for the group as well as the clients of Texelis.

The acquisition price was undisclosed, the analyst said, but when Volvo put Arquus up for sale in 2016, the main subsidiary, Renault Trucks Defense (RTD) had annual sales of some €400 million, and Nexter/KNDS France had bid €420 million.

Volvo saw that offer was too low and took RTD off the market in 2017. The truck maker and its then bank adviser Rothschild had expected bids of €500 million to €700 million for its Volvo governmental sales division.

KNDS France and Texelis said they welcomed the planned acquisition.

“This structuring project will enable us to strengthen our growth and increase our skills in the mobility field, with a high-performance French company that we know well and that is already our partner in the temporary business venture Serval,” Nicolas Chamussy, chief executive of KNDS France, said in the company statement.

Charles-Antoine de Barbuat, chairman of Texelis, said, “The future integration of Texelis’ Defense business into the KNDS group would open up numerous growth prospects, beyond the initial success of the collaboration.

“In addition, the Transport business has all the assets needed to pursue its development independently.”

The transport business includes axles and drivelines for rail transport, subways, and trams.
Texelis was a management buy-out in 2019, backed by institutional investors including the state-backed BPI France, .

Arquus posted 2023 net profit of €3.97 million on sales of €581 million, after 2022 net profit of €8.14 million on sales of €559.21 million. That gave a net profit margin of 0.68 pct, down from 1.46 pct.

A Signing for A New Tank Company

KNDS Deutschland, KNDS France, Rheinmetall Landsysteme and Thales signed the articles of association for MGCS Project Company GmbH, to be based in Cologne, Germany, the companies said in a Jan. 23 joint statement.

The MGCS program will replace the Leopard 2 and Leclerc heavy tanks with a “cross-platform combat system” in 2040, the companies said.

That replacement by the MGCS would be in 2035, the French armed forces ministry said in a Jan. 24 statement.

The French and German defense ministers, Sébastien Lecornu and Boris Pistorius, attended the signing, which the companies said was an “essential step” in setting up the MGCS project company.