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Rheinmetall has agreed to buy a Mittelstand producer of propellants for ammunition, as Germany’s largest defence contractor races to strengthen its fragile gunpowder supply chain.
The arms maker said on Monday said it was set to acquire Hagedorn-NC — a nitrocellulose manufacturer based in Lingen an der Ems that just a few years ago was on the brink of insolvency — for an undisclosed sum.
“The acquisition helps us close a strategic bottleneck in propellant production,” said Rheinmetall chief executive Armin Papperger, adding that the deal would secure access to “a key source of raw materials . . . in ammunition production”.
Since Russia’s invasion of Ukraine, European defence contractors have warned of an undersupply of nitrocellulose — an explosive propellant also known as “guncotton” that drives artillery munitions out of gun barrels — as Russia has been increasingly sourcing ingredients from China.
Rheinmetall, which aims to deliver 1mn rounds of Nato-standard 155mm ammunition to customers by the end of next year, currently produces nitrocellulose at three locations in Switzerland, Spain and South Africa.
The Düsseldorf-based company — one of the rare stock market winners from the war in Europe — was on Monday hit by the looming tariff war unleashed by US President Donald Trump. Its share price fell by around a quarter in morning trading in Frankfurt, before recovering slightly to a 9 per cent decline.
Other German defence contractors suffered similar losses, with tank gearbox maker Renk down 10 per cent in morning trading and radar and sensor manufacturer Hensoldt falling 11 per cent.
Hagedorn-NC, which employs 90 people, was founded in 1910 and has previously supplied predominantly civilian customers, such as makers of coatings, inks, and lacquers. Aside from its use in gunpowder, nitrocellulose is also found in products including nail polish.
Rheinmetall said on Monday that, pending antitrust approval, the Mittelstand company would cease supplying its former civilian customers “in the coming months”, with production set to shift to military-grade nitrocellulose.
Gerd Hofmann, chief executive of Hagedorn-NC’s parent company, said he was “very pleased” with the deal, which he said would offer the small chemical group “new perspectives and growth opportunities”.
