ABU DHABI — The United Arab Emirates' newly formed national defense company, Emirates Defence Industries Co. (EDIC), has acquired five major UAE defense firms under its umbrella, its chairman told Defense News.
The merger — the first of its kind in the Arabian Gulf and looks to combine the UAE's defense industries into a single entity — launched on Dec. 2. Now it has acquired Tawazun-owned pistol and rifle maker Caracal, light munitions maker Caracal Light Ammunition, and munition systems company Burkan.
The company also integrated Mubadala's unmanned systems developer Abu Dhabi Autonomous Systems Investment (ADASI) and AMMROC, the advanced military maintenance, repair and overhaul center, which is a joint venture between Lockheed Martin, Sikorsky and Mubadala with EDIC taking over Mubadala's share.
The five firms are in addition to the 11 companies that EDIC integrated during its first phase.
"The total assets that have been transferred from the 11 companies under EDIC are 3.2 billion dirhams [US $860 million] and we have 4,800 jobs on our payroll," said Homaid al-Shemmari, chairman of the EDIC board.
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Of the new companies integrated, Caracal produces handguns and rifles for the UAE military and has made export sales to Gulf Cooperation Council, Italian and US forces.
"At this stage of the game we are going to leave companies interacting internationally to follow their current models and at later states we will look in to the international markets and see what needs to be done at a group level or not," al-Shemmari told Defense News.
The company is being dubbed as the region's premier integrated national defense services and manufacturing platform, providing world-class facilities, technology and support services.
"EDIC will have one and a half years to two years to evaluate and identify the synergies, overlaps and complete its assessment to place the companies together in its workflow without disrupting its ongoing operations," he added.
The company also will continue to provide regional services through its subsidiaries such as AMMROC, but will also valuate development to enhance these services, al-Shemmari said.
"We will continue with EDIC's mandate to present primarily services to the UAE armed forces and the region, however there are some services that we will need to enhance and others to maintain in order to serve the region."
Once fully integrated, EDIC will comprise companies including manufacturing, training, mapping, logistics, technology development and communications, as well as maintenance, repair and overhaul services for air, land and sea platforms.
The UAE has the highest number of defense companies covering shipbuilding, unmanned systems, aviation and land systems in the region. More than 80 registered companies are based in Abu Dhabi, Dubai and Ras al-Khaimah, and at least 15 of those are state-owned firms.
By merging, the companies would develop an economy of scale to tackle export markets, said Ahmed al-Attar, assistant director for defense and security at the Delma Institute in Abu Dhabi.
"There are many capital expenditures in the UAE defense industry, and costs for setting up facilities, recruiting and developing scientists and engineers are high," he said. "They are trying to cut down on these expenditures and also bring down operational costs."
This approach is part of the UAE government's drive to bring down cost and is a push to be more lean and efficient, al-Attar said.
"A lot of nascent arms export nations are under threat to lose large amounts of money in set-up costs, and this is part of making the industry more globally competitive," he added.
"These companies are state-owned and with all of them coming under one umbrella, the money will be coming from state, there will be questions of how the money is being spent."
The five companies join 11 already acquired. They are:
• Al Taif Technical Services
• Bayanat for Mapping & Surveying Services
• Horizon International Flight Academy
• NIMR Automotive
• Tawazun Dynamics
• Tawazun Precision Industries
• C4 Advanced Solutions
• Global Aerospace Logistics
• Naval Advanced Solutions
• Secure Communications
• Thales Advanced Solutions.