PARIS \u2013 French-German joint venture KNDS, Belgian CMI and private equity firm Advent each filed offers to buy Renault Trucks Defense, two industry executives said Friday.
“KNDS is an actor in the consolidation of European land defense,” a Nexter spokesperson told Defense News in February. “The sale of RTD by Volvo is an opportunity.”<\/p>\n\n\n\n
That approach is based on a “complementarity” as Nexter and RTD work as partners on the French Army\u2019s Scorpion modernization program, the VBCI infantry fighting vehicle and Caesar cannon, a second executive said. RTD specializes in armored vehicles less than 14 tons, while Nexter supplies heavier platforms.<\/p>\n\n\n\n
If KNDS were to win the tender, RTD would join as a third partner to the French-German joint venture rather than face a shut down.<\/p>\n\n\n\n
“An acquisition would not lead to any closures,” Nexter chairman Stephane Mayer told business daily Les Echos May 16.<\/p>\n\n\n\n
RTD, which is cash rich, would need a new IT system, likely to cost \u20ac10 million to \u20ac15 million (US $11.3 million to $16.9 million) over five years and replace the present network which has servers in Sweden, the first executive said. The company makes double digit annual profit and has forecast 2017-18 sales of \u20ac700 million to \u20ac800 million (US $789 million to $902 million).<\/p>\n\n\n\n
The Direction G\u00e9n\u00e9rale de l\u2019Armement procurement office is not involved in the present stage of the tender and would only intervene if there was a foreign buyer, a spokesman said.<\/p>\n\n\n\n
“The DGA will seek assurance the key French requirements of our armed forces will be met over the long term, particularly in view of RTD\u2019s role in the Scorpion program,” he said.<\/p>\n\n\n\n
The previous French defense minister, Jean-Yves Le Drian, encouraged Nexter to bid for RTD, but there is now a new government formed, which may spark uncertainty over political support, the second executive said.<\/p>\n\n\n\n
General Dynamics is unlikely to be on the short list as it is “impossible” France would accept a bid by a U.S. company, the first executive said. He pointed to the lack of reciprocity due to the Buy America Act and the America First campaign as the reason.<\/p>\n\n\n\n
Cinven had considered a bid and had worked on a business plan, including an expansion by acquisition. Iveco of Italy and French privately owned Soframe were seen as potential targets.\u00a0American Motors had also looked at RTD, Defense News was told.<\/p>\n\n\n\n
If CMI\u2019s bid were accepted, that would add a new industrial actor to European industry, partnering a maker of guns and turrets with a vehicle builder.\u00a0On brand names, Volvo uses the RTD and Mack company names by paying fees to Renault, the French car company which owns the names.\u00a0Whichever bidder buys the Volvo unit will want to use the present brands, particularly Mack, a widely known American name. “It\u2019s historic, it\u2019s American,” an executive said.<\/p>\n\n\n\n