Saudi Arabia May Dump German Deal, Buy American Tanks Instead

Don't look now, but General Dynamics (NYSE: GD  ) may be about to win another multimillion-dollar weapons contract.

That's the upshot of a new report out of DefenseNews.com, which itself cites a report in Germany's Handelsblatt newspaper warning that Saudi Arabia is about to cancel a deal to pay Germany $6.5 billion to acquire 270 new Leopard main battle tanks. According to DefenseNews.com, the Saudis are considering giving the contract to General Dynamics, and buying that company's Abrams main battle tanks, instead.

Reached for comment Friday, General Dynamics Land Systems Communications VP Pete Keating called any Saudi plans to make future tank purchases with GD "speculation." He did allow, however, that the company has favored GD's tanks in the past, having contracted to upgrade 200 to 300 M1A1 and M1A2 Abrams tanks to the M1A2S Saudi version of the tank. Keating noted that about 30% of the tanks under this contract have been delivered so far.

At a rough cost of $1.9 million per upgraded tank, this contract could ultimately be worth about $570 million to General Dynamics. A contract to sell the Kingdom new M1A2S tanks could be worth at least as much again. Speculatively, of course.


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