There is something symbolic about the fact that in Cologne, a city that for over a century lived off diesel engines for tractors and construction machinery, today the main topic is defense. On Thursday, July 9, Deutz AG announced that it had reached an agreement to acquire 100% of Flensburger Fahrzeugbau Gesellschaft mbH (Ffg), a historic military vehicle manufacturer based in northern Germany. The agreed price is close to 1.6 billion euros, to be paid partly in cash and partly through new Deutz shares.
This is the most decisive step taken so far by the Rhenish group in its transformation from an engine manufacturer to a diversified industrial group. But it is not a surprise, considering that the operation goes exactly in the direction indicated several times by CEO Sebastian Schulte, according to whom the group aims to become “a leading national supplier of systems for military vehicles, powertrains, and energy solutions.”
A COMPANY WORTH 760 MILLION
In the German defense sector, Ffg is certainly not an unknown name. The Flensburg-based company, with over 1,100 employees, has for years been involved in the production, repair, and modernization of military vehicles, both wheeled and tracked: recovery vehicles, infantry fighting vehicles, troop transports, as well as internally developed platforms. It also participates in multinational NATO armament programs and is a long-time supplier to the Bundeswehr, as well as to the Ukrainian armed forces.
2025 closed with revenues around 760 million euros, a result of the boost given to the entire sector by the increase in European military spending, which is leading many companies to invest in new production capacity. The order backlog, according to sources from specialized defense industry press, already exceeds the annual turnover several times over.
For Deutz, which today has about 6,000 employees worldwide and exceeded 2 billion euros in revenues in 2025, the operation means adding to its traditional expertise the ability to design and build complete military vehicles.
TWO COMPANIES, ONE UNIT
In the announced plans, Ffg will become the core of the new Defense Business Unit, while maintaining its managerial autonomy: the current CEOs, Max Heimann and Jörg Kamper, will remain at the helm. The group will instead ensure technological, financial, and strategic growth, providing its global service network. Speaking on behalf of the Ffg owning families was Norbert Erichsen: “With the strategic union with Deutz, we lay the foundations for future generations. At the same time, a German industrial hub in the defense sector is born, combining the strengths of both companies and promoting their long-term joint development.”
From a corporate perspective, the families that have so far controlled Ffg will enter Deutz’s shareholding with a stake of up to 29.9%, and will aim for two seats on the supervisory board of the combined company, which will maintain its balanced composition. The final decision will be made during an extraordinary shareholders’ meeting convened for August 24. The completion of the operation, pending antitrust approval, is expected between the end of 2026 and early 2027.
GROWTH ALREADY ANNOUNCED
Analysts closely following the sector were not particularly surprised. Handelsblatt notes that “for months Schulte has been working to strengthen Deutz’s presence in defense”: last year the group had already consolidated its military activities into a dedicated unit, acquiring stakes in tech startups and acquiring Sobek, a specialist in electric powertrains also used in military drones. With the entry of Ffg, the Defense Business Unit becomes the group’s fourth pillar, alongside the established Energy, Engines, and NewTech divisions, as well as the cross-cutting service activity.
Deutz expects “significant revenue synergies,” emphasizes the defense-specialized magazine Hartpunkt, especially in the Engines and Service sectors, and a “definitely positive effect on the overall EBIT margin, with the prospect of anticipating the targets set for 2030: 4 billion euros in revenues and a 10 percent EBIT margin.”
MERZ: GERMANY TO PURCHASE TOMAHAWK MISSILES FROM THE USA
The context in which the Deutz-Ffg operation fits found an additional piece on the political front on the morning of Thursday, July 9. Friedrich Merz informed the Bundestag that Germany will purchase Tomahawk cruise missiles from the United States, following an agreement reached with Washington on the sidelines of the NATO summit in Ankara.
The missiles, he explained, will be stationed on German territory and will serve to fill what the chancellor defined as “an important strategic gap in the national defense system.” Merz also expressed satisfaction with other results of the summit, highlighting how the Alliance’s European partners and Canada recognized the need to increase investments in their own defense.
THE QUIET RECONVERSION OF THE GERMAN INDUSTRY
Placed side by side, the acquisition of Ffg and the decision on the Tomahawk tell a story of a phenomenon crossing Germany on multiple fronts, industrial and political at the same time. More and more companies originally created to serve civilian markets (from automotive to heavy machinery) are shifting increasing shares of their production toward the military sector, driven by the growth in defense spending in Europe and the government of Berlin’s repeatedly stated will to keep technologies deemed strategic in German hands.
It is both a matter of industrial repositioning and a cultural change for entities historically linked to civilian products. Hartpunkt explains it precisely: defense programs, with cycles that can last from ten to thirty years, offer job stability and more predictable margins compared to traditional markets today marked by overcapacity and international competition.
It is within this framework that operations like the one between Deutz and Ffg and political decisions such as the purchase of Tomahawk must be read together: fragments of a broader transformation that is reshaping Germany’s industrial and strategic profile, along with the economic and security balances of the entire continent.
