COLOGNE, Germany — An agreement by two German shipyards to merge has dislodged a major legal roadblock in the multibillion-dollar program to build the Navy’s MKS 180 large frigate-type warships.

The Defence Ministry’s confirmation on Friday that German Naval Yards Kiel had dropped its protest against Dutch shipbuilder Damen, who was announced as the winner of the contract in January, was the final building block in a turbulent week for the European naval industry.

Days prior, the German shipbuilder said it would merge with Bremen-based Lürssen, giving the latter company the lead in building surface combatants together. Lürssen, for its part, is already part of the MKS 180 team as a subcontractor to Damen, and the Dutch said they would lean heavily on their German partner in building four initial vessels under the program.

Earlier this year, German Naval Yards Kiel lamented an unfair evaluation of its MKS 180 bid by the Defence Ministry, announcing it was prepared for a potentially lengthy legal battle. But just as litigious as the company sounded in its public proclamations, industry insiders said there appeared to be a willingness early on by all companies to come to an agreement outside of duking it out in court.

Damen, meanwhile, is expected to rethink the distribution of its MKS 180 workshare plan now that the former competitor is also onboard, albeit only by extension. Considerations to that effect would be a “logical next step,” one company official said.

“We are pleased with the consolidation of the German shipping industry under the leadership of the Bremer Lürssen Group,” a Damen statement read. “We look forward to intensive cooperation in the future. As Damen, we see this consolidation as a positive development.”

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The company also believes the merger would “increase the chance of equal cooperation between Northern European countries in the field of naval construction — a development that we can only applaud in an otherwise unevenly distributed European playing field.”

That leaves the question of what will happen with ThyssenKrupp Marine Systems, another losing bidder in the MKS 180 race. The company previously reported to be part of the German consolidation talks, leading to reports that a single, national shipbuilding “champion” was in the works.

For now, however, TKMS is still weighing its options, as Reuters reported this week. In one scenario, the shipbuilder could merge with Italy’s Fincantieri, with talks ongoing to that effect, according to the news service. It is also possible TKMS could join the other two German yards at a later time.

Whatever happens next, it appears a broader move toward naval-industry consolidation may be gaining steam in the wake of the Lürssen-GNY Kiel deal, according to experts.

“The cards are reshuffled,” said Sebastian Bruns, a naval analyst with the University of Kiel in northern Germany. “The consolidation is a significant step forward — and potentially not the final evolution in the Central European warship sector yet.”

Sebastian Sprenger is associate editor for Europe at Defense News, reporting on the state of the defense market in the region, and on U.S.-Europe cooperation and multi-national investments in defense and global security. Previously he served as managing editor for Defense News. He is based in Cologne, Germany.

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