Saudi Arabia has made a $1bn bid for a broad partnership with state-owned defence group Denel that would include acquisition of a minority stake in a joint venture with Germany’s Rheinmetall, a source familiar with the offer said. Heavily dependent on imports, Saudi Arabia, the world’s third-largest defence spender, is seeking partnerships to develop its own domestic defence industry with the goal of localising half of its military spending by 2030. Saudi Arabian Military Industries (Sami), the kingdom’s state defence company, told Reuters in October that it was in discussions with all major SA firms and aimed to conclude the first deals by the end of 2018. According to the source, who asked not to be named due to the sensitivity of the talks, Saudi Arabia was targeting Denel’s 49% stake in Rheinmetall Denel Munition (RDM).

RDM is a joint venture formed in 2008 between Denel and Rheinmetall Waffe Munition GmbH, which holds the remaining 51% stake. It specialises in the develop...

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