HELSINKI — Kongsberg Defence & Aerospace's (KDA) 49.9 percent strategic acquisition in Finnish state-controlled Patria Oy will create a major Nordic industrial defense group that would be second in revenue only to Sweden's Saab Corp., which posted sales of $3 billion in 2015.

The Finnish government put the total value of the transaction at €270 million (US $305.6 million). KDA, based in Norway, is expected to close the deal by the end of the second quarter of 2016. The Finnish state will retain a 50.1 percent ownership in Patria on an ongoing basis.

The share buy-in deal will be settled in cash and financed by a bridge facility provided by Oslo-based bank DNB.

According to KDA's CEO Walter Qvam, the KDA-Patria industrial partnership will become a stronger supplier of military systems to the Finnish and Norwegian markets.

"This industry partnership is taking a proactive step to meet the ongoing consolidation in the defense industry. The transaction means a significant strengthening of our Nordic and international position. It provides strengthened profitability and growth opportunities, and is an important step in the strategy for our defense businesses," Qvam said.

The Finnish state had been looking for an international defense-industrial partner for Patria since Airbus Group sold its 26.8 percent shareholding in the company in December 2014. The share buy-back deal gave the Finnish state 100 percent ownership in Patria.

KDA's 49.9 percent buy-in at Patria was negotiated with Finland's Ownership Steering Department (OSD), which is tasked with managing the state's investment-based and strategic shareholdings in listed and unlisted companies. The OSD operates as a unit of the Finnish Prime Minister's Office.

With 2,800 workers on payroll, Patria reported revenues of €428 million (US $485 million) in 2015. The company is Finland’s biggest producer of weapons systems and equipment. It is also Finland’s only defense company with the capability to build and assemble military aircraft.

Listed on the Oslo Stock Exchange, the Norwegian state owns 50 percent of the shares in KDA. Various other Norwegian funds and investors own a further 25 percent of the company's shares.

KDA operates four business areas: defense systems; protech systems; maritime; and oil and gas. KDA's parent company, Kongsberg ASA, has 7,700 employees and reported revenues of $2 billion in 2015.

Having KDA as a significant minority owner would open new doors of opportunity, particularly in the export area, said Heikki Allonen, Patria's president and CEO.

"This development will strengthen Patria's position as a significant player in the Nordic region and consolidate its position as the leading defense company in Finland. Patria will continue to be an essential part of the Finnish defense industry and security of supply going into the future," Allonen said.

The minority acquisition deal is expected to give a boost to Patria's operations in the international market, especially in the chase for new armored vehicle contracts, but also in the areas of equipment maintenance business, air defense and the production of aerospace components.

The Nordic defense-industrial partnership created by KDA's minority ownership in Patria will also include Nammo A/S, the Norway-based munitions and rocket motors-producing company, which is jointly owned by Patria and the Norwegian state.

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