German engine manufacturer Deutz, the country's oldest such company, has announced an agreement to acquire military vehicle maker FFG in a deal valued at approximately €1.6 billion. This represents the largest acquisition in Deutz's more than 160-year history.

The total consideration will be paid through a mix of cash and stock. The cash portion of around €1.0 billion will be financed through bank debt, while the equity portion of about €0.6 billion will be settled by issuing new shares to FFG's existing family shareholders. Upon completion of the transaction, the FFG shareholder family will hold roughly 29.9% of Deutz, becoming a long-term anchor shareholder.

Headquartered in Flensburg, Germany, FFG is a leading European supplier of military ground and special-purpose vehicles, employing over 1,100 people. The company specializes in the production, maintenance, and modernization of wheeled and tracked military vehicles, including armored recovery vehicles, infantry fighting vehicles, and armored personnel carriers. Its customer base includes the German Bundeswehr, NATO member states, and the Ukrainian armed forces. For the 2025 fiscal year, FFG generated revenue of approximately €760 million and has an order backlog that is several times its current annual revenue.

Following the acquisition, FFG will form the new core of Deutz's defense business unit while maintaining operational independence. Deutz CEO Sebastian Schulte stated that the combined entity will become Germany's leading systems supplier for military vehicles, drive systems, and energy solutions, jointly fulfilling responsibilities for European security and future resilience.

This acquisition is expected to significantly accelerate Deutz's profit growth. The company had previously set a strategic target for 2030 of achieving €4.0 billion in revenue with a 10% EBIT margin. This deal is anticipated to enable Deutz to reach these goals ahead of schedule. The transaction is subject to approval by Deutz shareholders at an extraordinary general meeting on August 24, as well as regulatory clearances, with completion expected by the end of 2026 or the first quarter of 2027.