Rheinmetall buys Loc Performance as it looks to expand in US market

By Matthias Inverardi and Alexander Hübner

DUSSELDORF (Reuters) -Rheinmetall will take over U.S. military vehicle supplier Loc Performance in a $950 million deal, the German defence group said, with an eye to improving its chances of scoring orders worth billions.

"The acquisition expands the Group's business with the U.S. military, increases its industrial base in the U.S. and creates further access for its technologies in North America," it said.

Shares in Rheinmetall were up 1% on 0705 GMT on Wednesday after the deal was first announced on Tuesday evening.

Loc, with about 1,000 employees, operates plants in the states of Michigan and Ohio, where it manufactures vehicle and armour products for civilian and military customers.

It said it makes drivetrains, suspensions, track systems, rubber products, armour products and fabricated structures for vehicles.

Chief Executive Armin Papperger, reportedly the target of a Russian assassination attempt, has repeatedly made clear that he has high hopes for the U.S. market and is planning acquisitions.

Rheinmetall already has factories in the United States and also cooperates with the U.S. company Lockheed Martin.

In particular, it expects the takeover to give it an edge in competing for two major U.S. military contracts: the XM30 infantry fighting vehicle (IFV) programme and the CTT project.

Loc Performance's current manufacturing capabilities can meet the programmes' critical production requirements, it said.

Rheinmetall is one of two participants in the prototype phase of the XM30 programme to build a new generation of tanks as the successor to the Bradley IFV, with an estimated volume of around 45 billion euros ($50 billion) for some 4,000 vehicles.

It is also participating in the Common Tactical Truck (CTT) programme for 40,000 military trucks worth around $16 billion.

($1 = 0.9090 euros)

(Reporting by Matthias Inverardi in Dusseldorf, Alexander Huebner in Munich and Aatreyee Dasgupta in Bengaluru; Writing by Miranda Murray; Editing by Mohammed Safi Shamsi and David Evans)