Germany's decision to scrap the €10 billion ($11.3 billion) F126 anti-submarine frigate contract with Rheinmetall sent the defense contractor's shares plunging by as much as 19%, marking their biggest intraday decline since April 2025. The project's cost was projected to surge from an initial €10 billion to over €18 billion ($20.4 billion), and it faced significant delays. Instead, Germany opted for eight smaller Meko A-200 frigates from Thyssenkrupp's marine division, TKMS, for an expected total budget of €11.6 billion ($13.2 billion). The first four Meko frigates are estimated to cost approximately €6.3 billion ($7.15 billion), with an option for four more at about €5.3 billion ($6 billion).
The F126 frigate program, initially awarded to Dutch Damen Schelde Naval Shipbuilding in 2020, had been troubled for some time. More than €2 billion had already been spent on the project. Rheinmetall's NVL division had been exploring taking over the project, with a proposed cost of around €15.2 billion for six ships, which would have exceeded €18 billion when accounting for prior work. The German Ministry of Defence stated that continuing the F126 program would have required waiving potential damage claims against Damen, which it was unwilling to do. The pivot to Meko frigates was also driven by the aim to meet NATO anti-submarine warfare commitments from 2028.
The cancellation was a major blow to Rheinmetall, Europe's largest ammunition maker, whose shares fell to their lowest level in nearly 15 months and experienced their sharpest daily fall ever. Conversely, TKMS's stock saw an 8.2% increase. The broader defense landscape in Europe is experiencing complex shifts, with Germany and France having previously abandoned their joint FCAS fighter jet project and their MGCS tank program running a decade behind schedule. In a related development, Franco-German tank maker KNDS announced plans for a dual Frankfurt-Paris IPO, which sources suggest could value the company at approximately €15 billion, amidst increased competition in the defense sector.
