Deutz buys defense manufacturer FFG for 1.6 billion euros

Price and financing of the deal

The agreed purchase price is approximately 1.6 billion euros. Part of it is to be paid in newly issued Deutz shares; the equity component currently has a volume of around 600 million euros. In return, FFG's previous owner family would hold 29.9 percent of Deutz's shares going forward.

According to its own statements, Deutz would become the second-largest defense producer in North Rhine-Westphalia through the acquisition, behind the Düsseldorf-based Rheinmetall group. Deutz CEO Sebastian Schulte said FFG would become the anchor of the defense business and should continue to operate as an independent unit. He described FFG as "one of the most attractive and profitable available defense companies in Europe."

FFG as the anchor of the new defense business

According to the group's own statements, FFG generated revenue of 760 million euros in 2025 and is profitable. The company's order backlog, as the company reports, amounts to 1.9 billion euros. Through the merger with Deutz, a German defense technology industrial alliance should be created that pools the strengths of both companies and advances their joint development on a long-term basis, said Norbert Erichsen, spokesperson of the FFG shareholder circle.

For Deutz, the acquisition would also be an important step toward achieving its growth targets. Last year, the company generated revenue of approximately two billion euros, 13 percent more than in 2024. For the current fiscal year, Deutz had indicated in May that revenue of 2.3 to 2.5 billion euros could be expected. The group had originally issued a revenue target of four billion euros by 2030; this target is now expected to be reached earlier through the FFG acquisition.

Deutz's existing defense business

Deutz's defense division is still comparatively small. The Cologne-based company already manufactures engines for a Polish troop carrier as well as auxiliary engines for tanks. Through the acquisition of FFG, the company could in future equip its own military vehicles with engines from its own production.

As recently as last year, Deutz had acquired a supplier of drone technology. Its electric drives and control actuators are installed in drones used by the Ukrainian army. With the FFG acquisition, the company is continuing the announced expansion of its defense business.

Workforce and locations

According to its own statements, Deutz currently employs around 6,000 people worldwide; at the end of March, the workforce numbered 6,014, roughly 500 more than a year earlier. The acquisition of FFG would add around 1,100 more employees. As a result, the workforce of the engine manufacturer, whose origins date back to 1864 and which describes itself as the world's oldest engine manufacturer, would be significantly larger going forward.

Deutz is regarded as one of the beneficiaries of the German federal government's planned billion-euro investments in infrastructure, since the group manufactures drives for construction machinery. With the significantly enlarged defense business, the company would now additionally benefit from rising defense spending.

The news was received positively on the stock market. Deutz shares rose by a good three percent to 9.03 euros by midday, thereby extending their price gains for the year 2026 to around six percent.

Approvals still pending

The merger is still subject to the approval of the Deutz shareholders' meeting as well as the antitrust authorities. Shareholders must approve the deal at an ordinary shareholders' meeting. The company only expects the process to be completed at the end of 2026 or the beginning of 2027.

Both companies look back on a long tradition. While Cologne-based Deutz manufactures engines for a wide range of industrial applications, FFG is specialized in the production, maintenance, and modernization of military vehicles. Both companies see in the merger the opportunity to pool their respective strengths and continue to grow together.

The deal is part of a series of acquisitions by Deutz in recent months. With the FFG acquisition, the company would significantly strengthen its position as a major player in the German defense market. The Cologne-based group had only announced the previous year that it intended to massively expand its defense business.

Market reaction

On June 23, 2026, Warburg Research issued a buy recommendation ("Buy") for the Deutz share. The now-announced major deal is likely to further increase the attractiveness of the stock from investors' perspective, especially since FFG is regarded as a profitable company with a solid order backlog.

Overall, the planned merger underscores the trend toward consolidation in the European defense industry. With the combination of engine expertise and vehicle manufacturing, an integrated provider is, according to the parties involved, being created that will be capable of supplying military vehicles with drives from a single source in the future and mapping the value chain in-house.