Germany's defense ministry officially terminated the F126 frigate program, a multi-billion euro project expected to deliver six frigates, leading to a significant drop in Rheinmetall's shares. The company's stock fell over 16%, with some reports indicating as much as a 19% intraday decline, marking its sharpest daily fall. This decision came after the ministry determined that continuing the program, with Rheinmetall now as the primary contractor, would push the total cost for six F126 ships to over €18 billion, including a €15.2 billion contract with NVL.
The F126 project had been plagued by delays and cost overruns since its inception in 2020, with over €2 billion already spent. Rheinmetall had offered in May to take over the project for a total of €12.8 billion, a deal it expected to finalize in the second quarter. The cancellation is a blow to Rheinmetall, which had planned to integrate its technologies across various defense systems through this project. The original program value for six F126 frigates was estimated at approximately €10 billion.
Instead of the F126 frigates, the German defense ministry now plans to procure a total of eight Meko A-200 frigates from TKMS. The initial four Meko A-200 frigates are estimated to cost about €6.3 billion, with an option for four more at €5.3 billion. TKMS stated they are pleased with this decision and have already begun preparatory work, aiming to deliver the first Meko A-200 frigate in 2029. This shift caused TKMS's shares to jump 9.8%. The smaller Meko A-200 frigates are about 120 meters long, compared to the F126's planned 166 meters, and are primarily for anti-submarine warfare.
