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Rheinmetall Acquires Majority Stake in South African Firm

Manufacturing and Engineering

Rheinmetall, Stake, Ammunition, Production

Business Honor
05 August, 2024

Rheinmetall acquires majority stake in South African firm Resonant Holdings to expand ammunition production capabilities.

Germany's Rheinmetall has agreed to take a majority stake in South African engineering firm Resonant Holdings. Its goal is to respond to the growing global appetite for ammunition production facilities. Rheinmetall will own 51% of the new joint venture, while Resonant's existing shareholders will retain the balance. The deal was done for an undisclosed amount. Rheinmetall said it would gain considerable expertise with the design and construction of chemical and explosives plants, allowing it to significantly broaden its capabilities in the production of ammunition.

With over 50 years of experience in building facilities for explosives and chemical industries, the company, with a workforce of around 150 people, joins the group, which aligns with the increasing demand for ammo production facilities post the war in Ukraine, during which the preparedness of the NATO members with regard to supplies of ammo was at its worst. Rheinmetall views this as an opportunity to improve their own skills in plant engineering and chemical technology.

The new joint venture will be responsible for over €100 million a year in terms of annual sales. According to the management, an acquisition in a larger vertical strategy will allow them to vertically integrate in the event of growing requirements for high quality ammunition production stemming from the boost in defense expenditure of the respective NATO countries.

The deal follows the acquisition of Spanish munitions maker Expal Systems by Rheinmetall in 2023 and builds on its existing South African subsidiary, Rheinmetall Denel Munition. The company also recently announced investments to increase its production capacity in Germany, with plans to produce 700,000 artillery rounds annually by 2025.

This step further highlights the trend of defense companies expanding their manufacturing capabilities to meet surging demands for ammunition, a critical component of modern military operations.