Germany's defense ministry has canceled the F126 frigate program, originally a €10 billion contract for six warships, which was facing significant delays and cost overruns. The project had already incurred about €2.3 billion in costs and was projected to exceed €18 billion if continued. The ministry opted instead to procure eight MEKO A-200 frigates from ThyssenKrupp Marine Systems (TKMS). This decision led to a sharp drop in Rheinmetall's shares by over 16%, marking one of its worst daily performances, as Rheinmetall-owned Naval Vessels Lürssen had been set to take over as the prime contractor for the F126 project.
The new plan involves acquiring four MEKO A-200 frigates for approximately €6.3 billion, with an option for four more at around €5.3 billion, bringing the total to an estimated €11.6 billion for all eight ships. TKMS, which had already begun preparatory work, expects to deliver the first MEKO frigate in 2029. This strategic shift is intended to meet NATO anti-submarine commitments from 2028. TKMS shares surged by 9.8% following the announcement, reflecting a positive market reaction to securing the new warship orders.
In related news, Franco-German tank manufacturer KNDS, a strategic asset for both countries and involved in the development of future tank systems, announced plans for a dual Frankfurt-Paris IPO. This move could value the company at around €15 billion. Germany plans to acquire a 40% stake in KNDS through the Kreditanstalt für Wiederaufbau, while existing shareholders will sell about 20% of the company to institutional investors. This IPO comes amidst complex rearmament efforts in Europe, where other joint defense projects, like the FCAS fighter jet and MGCS tank programs, have also faced significant delays and challenges.
