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Israeli defence giant Rafael will become a key partner in transforming a Volkswagen plant in Germany into an air-defence manufacturing hub, after an earlier proposed deal was reportedly blocked by Qatar.
Under a preliminary deal struck on Monday, the VW plant in Osnabrück, Lower Saxony, will be acquired by Israeli investment firm Aurelius Capital as majority owner, alongside the German state of Lower Saxony.
Rafael Advanced Defence Systems will become the first major industrial partner, producing components for the Iron Dome missile defence system at the site.
The unusual structure follows months of tensions over the project. Earlier plans envisaged Volkswagen working directly with Rafael to produce Iron Dome parts.
However, Qatar, Volkswagen’s third-largest shareholder, reportedly vetoed the proposed joint venture with the Israeli defence company. German newspaper Handelsblatt reported in July that Qatari opposition had put the project in jeopardy, citing sources within Volkswagen and close to the Qatari government.
The new arrangement effectively bypasses that obstacle, with Volkswagen instead selling the factory to Aurelius and Lower Saxony, which will then work with Rafael.
Industry publication Defence Post described the structure as a “workaround” following Qatar’s intervention.
The firms intend to turn the site into a centre for security and defence technology, initially exploring production of air-defence systems and components for Germany and Europe. Volkswagen’s own announcement confirmed Rafael would provide technological expertise while the Osnabrück workforce would help to establish manufacturing operations.
The transformation could preserve around 1,400 of the plant’s 1,800 jobs, according to Reuters.
Rafael chief executive Yoav Tourgeman said the aim was ultimately to have the technology “fully produced in Germany, to protect Germany and Europe”.
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