JSE-listed Reunert has concluded an agreement with CSG, formerly known as the Czechoslovak Group, to establish a strategic European electronic fuze manufacturing capability for large calibre ammunition in Slovakia.

The business, to be named Fuchs Electronics Europe, will be owned 51% by Reunert and 49% by CSG.

The establishment of the business is subject to customary regulatory and closing conditions, including applicable foreign investment screening, competition authority, defence-sector and exchange control approvals, the company said in a statement on Friday.

“The establishment of Fuchs Electronics Europe reflects the long-term commitment by Reunert and CSG to build an independent, in-market supply capability for European customers that will be supported from South Africa by Fuchs Electronics as the technology originator and design authority.”

Fuchs Electronics, a wholly-owned South African subsidiary of Reunert, is a globally recognised design authority for electronic fuzes, with more than 60 years’ experience and technology that is operationally proven and fielded across multiple armed forces worldwide.

“The business will operate as an agnostic supplier, not tied to any single ammunition original-equipment manufacturer or end-customer, supporting diversified demand and resilient supply chains,” Reunert explained.

The production facility will be located in Dubnica nad Váhom in Slovakia, underpinned by Fuchs Electronics’ technology and operating know-how and CSG’s manufacturing footprint, regulatory and licensing know-how, established supply chain and customer access.

This combination will position Fuchs Electronics Europe to respond on a competitive basis to the structural growth in European artillery demand as defence ministries modernise and rebuild their artillery stockpiles.

The business is being established on a capital-efficient basis supported by a binding launch order underpinning its revenue during the three-year ramp-up period.

It is envisaged that the business will be self-sufficient within approximately three years from the start of operations and will achieve attractive margins, which are expected to be value accretive to both Reunert and CSG.

“The investment significantly enhances CSG’s large calibre ammunition portfolio. Electronic fuzes are technologically sophisticated and strategically important components. The combination of Fuchs’ world class technology with our manufacturing and distribution capability will increase CSG’s competitiveness and reinforces our role as a reliable partner to European customers,” said CSG Defence CEO Jan Marinov.

Reunert believes Fuchs Electronics Europe will provide European customers with a credible and reliable source of advanced electronic artillery fuzes while reinforcing the role of independent technology partners in Europe’s evolving defence ecosystem.

This creates a strategic growth opportunity for Reunert by significantly expanding its access to the European artillery market.

“Combining our technological know-how with CSG’s industrial capability creates a strong European manufacturing base for electronic artillery fuzes aligned with the applicable NATO qualification requirements.

“The investment in Fuchs Electronics Europe will allow Reunert to respond more effectively to the growing demand for modern artillery ammunition and contribute to the strengthening of Europe’s industrial defence capacity,” added Reunert Applied Electronics Segment CEO Trevor Raman.