Germany's Rheinmetall to acquire driveline supplier Loc Performance in $950 million deal

DUSSELDORF, Germany — Rheinmetall Group plans to acquire driveline supplier Loc Performance in a $950 million deal, the German defense group said, with an eye to improving its chances of scoring orders worth billions.

"The acquisition expands the Group's business with the U.S. military, increases its industrial base in the U.S. and creates further access for its technologies in North America," it said late Tuesday in a statement. 

The deal is subject to various government regulatory approvals.

Loc, with about 1,000 employees, is based in Plymouth, Mich., and operates plants in Michigan and Ohio. It makes vehicle and armor products for civilian and military customers.

It said it makes drivetrains, suspensions, track systems, rubber products, armor products and fabricated structures for vehicles.

Rheinmetall CEO Armin Papperger, reportedly the target of a Russian assassination attempt, has repeatedly made clear that he has high hopes for the U.S. market and is planning acquisitions.

Rheinmetall already has factories in the U.S. and cooperates with defense contractor Lockheed Martin.

In particular, it expects the takeover to give it an edge in competing for two major U.S. military contracts: the XM30 infantry fighting vehicle program and the CTT project.

Loc Performance's current manufacturing capabilities can meet the program's critical production requirements, it said.

Rheinmetall is one of two participants in the prototype phase of the XM30 program to build a new generation of tanks as the successor to the Bradley IFV, with an estimated volume of around 45 billion euros ($50 billion) for some 4,000 vehicles.

It is also participating in the Common Tactical Truck program for 40,000 military trucks worth around $16 billion.