TheChek News Flow

Real estate developer CPIPG, run by Radovan Vítek, preparing to segregate assets after Cypriot court order

One of Europe’s largest property groups is bracing for the impact of a complex legal dispute between its billionaire owner and two convicted money launderers who say they privately bankrolled him. 

Senior executives at CPIPG, the Frankfurt-listed group run by Czech billionaire Radovan Vítek, are preparing plans to segregate €537mn of assets following a freezing order from a Cypriot court.

The court made the order in favour of the two litigants, Czech investors Marek Čmejla and Jiří Diviš, earlier this year. But legal wrangling has until now meant that it has not been enforced.

The investors’ victory increases the likelihood that the central claims at the heart of the dispute — which has bounced from jurisdiction to jurisdiction due to technical legal challenges over the past few years — could finally be heard.

Čmejla and Diviš have been unsuccessfully pursuing CPIPG and Vítek through the courts for several years, alleging the billionaire developer cheated them out of a huge early investment in his group. Vítek has denied the claims and cases in the Czech Republic, Luxembourg and US have all been thrown out.

Vítek, CPIPG’s Swiss-resident majority shareholder, built his property empire through a series of audacious and sometimes aggressive takeovers, swooping on underpriced property companies — often using complex financial structures to secure control.

In their application for the asset freeze seen by the FT, Čmejla and Diviš claimed that a complex series of corporate shells and trust arrangements were manipulated to lock them out of access to property assets to which they had legal title.

Vítek denies that he had any clandestine arrangement with the pair.

At the centre of the investors’ case is the accusation that a “parity partnership” with Vítek was established in secret because, as convicted money launderers, it was felt by both themselves and the property tycoon that any publicly-known investment might have had a detrimental effect on the group’s access to future sources of capital and banking services.

In 2013 Switzerland’s central criminal court found the pair guilty of a “massive” criminal scheme to plunder Czech coal company Mostecká uhelná společnost, or MUS, in which money was laundered through a network of more than 100 Swiss bank accounts.

CPIPG and Vítek’s legal advisers argue the conviction should have significant bearing on the legal dispute.

Although CPIPG executives dispute the allegations, the group has been forced to develop legal contingency plans to comply with a notice expected from the court in Cyprus, people familiar with the matter told the Financial Times.

The group believes it can easily pledge unencumbered liquid assets from its €20bn portfolio to meet the court order’s requirements, the people said, and will not have to pledge cash.

But the lawyer for the investors, Marek Stubley, has cast doubt on whether “ring-fenced” property assets pledged by legal means from CPIPG would fulfil the Cypriot court’s asset freezing order. He said his clients expected cash to be held in segregated bank accounts.

Many large European commercial property investors are still facing a liquidity squeeze after portfolio values nosedived due to rising interest rates over the past two years.

Executives at CPIPG, which has €4.9bn of bonds outstanding, say they have ready access to capital and liquidity, and have been completely transparent with creditors over the legal challenge to the company.

“The plaintiffs have repeatedly tried, and failed, to ‘forum shop’ these allegations across courts in various jurisdictions,” CPIPG said in a statement.

“The ruling in Cyprus, which CPIPG has appealed, has had no practical impact on the Group or any bank accounts or assets belonging to CPIPG or Vítek. CPIPG’s real estate portfolio continues to perform well and we remain focused on executing our strategy.”

The appeal process could take up to two years to complete. The Cypriot courts have held that a full complaint must be filed by Čmejla and Diviš by the first week of December.

The 53-year-old Vítek is a combative figure, who, in a 2018 dispute with the local municipality for the luxury Swiss resort of Crans-Montana, turned off the ski lifts which he then owned. The move choked the town of the winter sports enthusiasts that were its most valuable source of money.

Vítek sold his investment in Crans-Montana’s ski lift operator last year.

CPIPG has also been targeted by the prominent short seller Muddy Waters, which in November 2023 accused Vítek of overvaluing assets and “asset stripping” companies in the group.

An independent review into the group’s financial affairs by law firm White and Case, commissioned in response by CPIPG’s board, concluded in September that the allegations were unfounded.

Annual revenues from copyrighted music hit almost $46bn last year, against $33.2bn for cinema

Music industry revenues rose a tenth last year — overtaking cinema’s pre-pandemic sales peak — on the back of booming streaming platforms and the renaissance in vinyl records.

Annual revenues from copyrighted music were $45.5bn last year, up a quarter since 2021 and double the 2014 figure, according to a report based on data from trade bodies. It compares with cinema box office spending of $33.2bn last year and $41.9bn in 2019, according to media consultancy Omdia.

“Make no mistake: it’s boom time,” said Will Page, the report’s author, a former chief economist at music streaming platform Spotify and a fellow of the London School of Economics.

“Cinema’s pain has been the streamers’ gain,” Page said, noting that streamers tended to pay more for music than filmmakers do. “If you had suggested when we first did this exercise in 2015 that music might overtake cinema, you would have been laughed out of the room.”

Revenues for record labels and their artists were $28.5bn, up 12 per cent on a year earlier, showing how the industry has ridden the growth in music consumption helped by the popularity of streaming services.

The remainder — about a third — was accounted for by music publishers and songwriters, with consumers paying for music directly as well as commercial enterprises such as TV shows and restaurants. 

Physical sales of music such as CDs and vinyl rose faster than streaming revenues, with vinyl in particular rising by 15.4 per cent. In the US alone, vinyl will generate $1bn a year for labels by the end of 2024, and will soon overtake CD sales, the report predicted.

Page’s report, an annual study, uses data from the International Federation of the Phonographic Industry, artists’ organisation CISAC and the International Confederation of Music Publishers.

The value for music publishers and songwriters of live performance now exceeds that of general licensing such as through shops and hotels, showing the extent to which bands and artists hit the road to make their money rather than relying on their old releases being played in retail and hospitality settings.

A number of older bands — such as Oasis — have reformed to tap into the surge in popularity of live music, while acts such as Coldplay are playing venues on more nights.

The value of digital channels now exceeds that of broadcast and radio for music publishers and songwriters, according to the report. A decade ago, digital made up about 5 per cent of revenue collections, while broadcast made up half.

The report also shows the globalisation of music, with almost a third of all streams inside America from non-American artists, while Britain is the single largest importer of music into the US. 

Deal season is back. That’s the sentiment of many on Wall Street who expect Donald Trump’s re-election to trigger a new wave of merger activity. The changed political landscape could also see the rekindling of large Biden-era deals—featuring well known brands like Intel, Albertson’s and Tempur Sealy—that were blocked on antitrust grounds, or simply abandoned, as companies bet the time is ripe to try again.

The climate to resurrect stalled mergers (scroll down for our list of top 5) is more favorable in part because many predict Lina Khan, the current chair of the Federal Trade Commission and a noted antitrust hawk, will be out the door shortly. Trump is expected to turn to one of the two current Republican FTC commissioners to serve as an acting lead for the agency.

“With the replacement of Lina Khan, we will see some heavy M&A action kick off even before the Trump administration is sworn in. It will be an interesting time because people are ready to spend and innovate,” said Liz Miller, VP and principal analyst at Constellation Research.

Meanwhile, the Justice Department—the other agency that shares antitrust enforcement with the FTC—is likely to move away from recent rhetoric and policies that had a chilling effect on deals, according to industry insiders. “The Biden administration discouraged lots of transactions by just dragging out the review process and making it longer and expensive,” one industry insider said.

For context, Biden’s regulators in 2023 filed a record 50 enforcement actions to fix or block merger transactions. Many blamed Biden’s antitrust zeal with helping slowdown M&A. The number of U.S. announced mergers are running off 34% from 2021, when a record 15,582 deals totaled $2.5 billion [TRILLION RIGHT?] in value, according to data from Dealogic.

“The policies advocated by the FTC and the DOJ over the last four years have undoubtedly hampered deal activity and corporates’ willingness to forge into a transaction with the inability to gauge the likelihood of close,” said Michal Katz, head of investment and corporate banking at Mizuho Americas, a division of Mizuho Financial Group.

Big mergers back on the table?

One of the biggest deals that fell by the wayside due to regulatory interference was Nvidia’s $40 billion offer to buy Arm, which was announced in September 2020 while Trump was still in office. It was Biden’s FTC that sued to stop the chip merger in December 2021, leading Nvidia to call off the deal months later, in 2022. There is little chance that Nvidia will ever buy the chip designer now. Arm went public in fall 2023 and is currently worth about $145 billion.

Some deals still went forward despite regulatory opposition. Microsoft offered to buy video game developer Activision Blizzard in January 2022 for $68.7 billion. Despite an FTC lawsuit to stop the deal, a federal judge sided with the companies and let the merger go ahead, though the agency is currently appealing the decision.

While blocked deals involving giants like Nvidia made the headlines, Michael Sibarium, a partner at law firm Pillsbury Winthrop Shaw Pittman, says Biden’s antitrust policies also had a chilling impact on smaller deals. This was the case partly due to prolonged review processes that big businesses like Microsoft can better deal with, while smaller companies may lack the resources, Sibarium said. “If you are one of the wealthiest companies in the world, you can afford to fight if you want to fight. And you can make it go faster by hiring teams and teams of lawyers.”

Antitrust law under Trump won’t be out the window altogether. During the President-elect’s first term, regulators initiated a number of cases against Big Tech. It was Trump’s DOJ that filed an antitrust lawsuit against Google’s search monopoly, resulting in a landmark ruling against the company this year. Under Trump, regulators also sued Facebook over antitrust and called for a ban on TikTok.

Nearly everyone is expecting deals, including mergers and IPOs, to increase next year. Wall Street already has four years getting used to Trump, Mizuho’s Katz said. While it’s unclear which campaign promises he will keep, Trump is a “known unknown,” Katz said.

“We’ll see increased dealmaking activity in [IPOs and mergers] because the election uncertainty has been removed from the equation,” she said.

Fortune set out to discover which deals may get a second chance under Trump 2.0. One private equity executive who invests in tech said many companies “don’t want to be the guinea pig to try and see what can be approved [under Trump], especially if they have tried once before and failed.” For that reason, we have chosen not to include some deals that were emphatically rejected, like Adobe’s failed buy of Figma, or where companies have clearly signaled a merger is not on the table, such as with Cigna and Humana.

Here is our list of five super size deal that could get the green light in 2025:

In October 2022, Kroger agreed to buy Albertsons in a $24.6 billion grocery store merger that would combine two rivals in one of the biggest supermarket mergers in history. In February, the FTC sued to block the transaction, alleging the merger would lead to higher prices for groceries and other essential household items. Judges in three separate states—Oregon, Colorado and Washington—are reviewing the case, including one in Seattle who was expected to issue a decision on Nov. 15 but has since delayed. Kroger’s stock has gained about 4% since the Nov. 5 presidential election while Albertsons has increased by about 3%.

There were two possible Google/Alphabet deals this year. In one, Alphabet considered making a $25 billion offer to buy CRM provider HubSpot earlier this year, according to press reports. Negotiations didn’t get to the due diligence phase before Alphabet walked away. In the other, Google held discussions to buy cybersecurity firm Wiz for $23 billion before that deal dissolved. Either deal would’ve been Google’s biggest ever and both risked attracting antitrust scrutiny, which likely contributed to the decision to call off both. Under Trump, scrutiny could get less intense, opening the door for it to snap up Wix or Hubspot. Trump and the GOP, however, have cultural axes to grind with Big Tech, meaning Google could have a harder time than others. Shares of HubSpot, which beat third quarter estimates earlier in November, have rocketed 27% since Nov. 5. Wiz, meanwhile, has said it’s pursuing an IPO.

Qualcomm is said to have approached Intel in September about buying the slumping chipmaker. Qualcomm backed off the deal as it waited to see who won the U.S. presidential election, Bloomberg reported. A merger would likely draw intense scrutiny from antitrust regulators around the world, including the U.S. and China, the story said. Intel’s stock is up about 9% since the election. Intel declined comment.

Tempur Sealy, the world’s largest mattress supplier and maker, agreed to buy rival Mattress Firm for $4 billion in May 2023. In July, the FTC voted to block the deal, arguing that the Tempur Sealy will have the “ability and incentive to suppress competition and raise prices for mattresses for millions of consumers” once it buys Mattress Firm. In September, Tempur Sealy said it believed a “successful litigation process can be completed in the coming months” and expected the deal to close later in 2024 or early 2025. It also agreed to divest some Mattress Firm retail locations and its Sleep Outfitters subsidiary. Tempur Sealy filed a motion in October asking a Texas district court judge for a preliminary injunction that would stop the FTC’s administrative proceeding that is set to begin on Dec. 4. The FTC is also pursuing a federal court case to stop the merger, also in the southern district of Texas, that began on Nov. 11 and is ongoing. Shares of Tempur Sealy have gained more than 11% since the election.

The fate of Japan’s Nippon Steel’s nearly $15 billion buy of U.S. Steel, announced in 2023, is unclear. The Biden administration has said it would block it. The Committee on Foreign Investment in the United States, or CFIUS, was reviewing the deal but has yet to issue its final recommendation. The merger has faced significant opposition from Trump, and the United Steelworkers. Eiji Hashimoto, Nippon’s chairman and CEO, told Japanese weekly Shunkan Bunshun on Nov. 13 that he hasn’t ruled out suing the U.S. government if regulators block the acquisition. U.S. Steel’s stock has gained about 6% since Nov. 5 while ADRs for Nippon are up about 2%.

Tesla CEO Elon Musk, who is also co-head of the new Department of Government Efficiency that is advising President-elect Donald Trump, called out the F-35 stealth fighter on Sunday while endorsing drones over jets piloted by humans.

On his social media platform X, he reposted a video of synchronized drone swarms flying in elaborate formations and added, “Meanwhile, some idiots are still building manned fighter jets like the F-35.”

“We have combat capable aircraft in operation today and they perform exceptionally well against the threat for which they were designed. Pilots continually emphasize that this is the fighter they want to take to war if called upon,” a spokesman for the Pentagon’s joint program office said. “The air system’s international footprint amplifies the platform’s benefits, and it is the aircraft of choice for Partners and Allies. The program includes the U.S. Services, seven International Partners and 12 Foreign Military Sales customers, and FMS interest in the platform continues to grow. In the next 10 years, there will be 700 F-35s in Europe and only 60 of these will belong to the US.”

Lockheed Martin, which is the prime contractor, said the company will work with the new administration and backed the F-35’s capabilities.

“As we did in his first term, we look forward to a strong working relationship with President Trump, his team, and also with the new Congress to strengthen our national defense,” a company spokesperson said in a statement. “The F-35 is the most advanced, survivable and connected fighter aircraft in the world, a vital deterrent and the cornerstone of joint all-domain operations.”

To be sure, the Pentagon has been flying a range of drones for decades, including for surveillance missions and air strikes. And a concept for a future next-generation air dominance program includes a mix of manned and unmanned fighters.

But Silicon Valley defense startups like Anduril are also developing drones while looking to change how the Pentagon develops and buys weapons. In fact, Anduril’s executive chairman has reportedly consulted with Trump and his team about revamping the military.

Meanwhile, hundreds of F-35s are already in use in the U.S. military and among top allies around the world. Over its production cycle, the Pentagon plans to buy about 2,400 F-35s for the Air Force, Navy and Marine Corps, to replace aging, non-stealth fighters.

The Pentagon first awarded Lockheed the contract in 2001, but the program has been a perennial punching bag due to cost overruns, delays, and its enormous price tag.

After including the expenses to develop, manufacture, operate, and maintain its eventual fleet of F-35s over the fighter’s total service life, which could extend into 2088, the Defense Department estimates that the F-35 will cost $1.8 trillion, making it the Pentagon’s costliest weapons program.

A recently declassified report from the Defense Department’s weapons testing chief found that the F-35’s reliability, maintainability and availability are “below service expectations.” In response to that report, Lockheed has said the F-35 “consistently meets or exceeds the reliability performance requirements we are contracted to deliver.”

In a Wall Street Journal op-ed Wednesday laying out DOGE’s agenda, Musk and fellow co-head Vivek Ramaswamy didn’t highlight any weapons programs but noted the the Pentagon recently failed a seventh consecutive audit, “suggesting that the agency’s leadership has little idea how its annual budget of more than $800 billion is spent.”

Any changes to the defense budget and weapons procurement ultimately must go through Congress, and F-35 production is spread across various districts and subcontractors.

The lawyer founded Chanel’s long-term private law firm and drafted the contract of Karl Lagerfeld in 1982.

PARIS — Eliane Heilbronn, the matriarch of the family that owns Chanel, has died at the age of 99.

Her death was confirmed by Chanel in a statement on Sunday.

“Chanel is extremely sad to confirm the death of Madame Eliane Heilbronn. The family will hold a private funeral,” it said.

Details on funeral and memorial services could not immediately be learned.

Heilbronn is best known for her career in law, which saw her draft the contract of Karl Lagerfeld when he was hired as creative director of Chanel in 1982.

Born in 1925 to Denise and Louis-Raymond Fischer, an architect who later took part in the French Resistance, Eliane Fischer grew up in Paris. Her parents divorced in 1939.

When Germany invaded France the following year, she and her younger brother Robert first found refuge in the South of France with their mother, who had remarried, before heading to Mexico City, where their new stepfather Marcel Bloch, a businessmann, had grown up and still had family ties.

Once World War II was over, Eliane Fischer, as she was then known, returned to France to pursue a university education with an eye toward law.

In 1947, she married Jacques Wertheimer, the son of Bourjois and Chanel co-owner Pierre Wertheimer. The couple welcomed sons Alain in 1948 and Gérard in 1951.

Following her 1952 divorce, she married Didier Heilbronn, a lawyer. The couple had a son, Charles Heilbronn, who is now the head of the family office Mousse Partners. The family moved to New York City where her husband joined the Louis-Dreyfus merchant firm.

Then in her 30s, Eliane Heilbronn enrolled in the New York Law School and graduated in 1958 with a master of law. After returning to Paris, she joined the newly minted law firm of Samuel Pisar in 1962.

When her former husband Jacques Wertheimer was sidelined from Chanel in 1974, leaving her eldest son Alain in charge at the age of just 25, Heilbronn became one of his key advisers. The same year, she was sworn in as a member of the Paris bar.

The lawyer would subsequently cofound Salans Hertzfeld & Heilbronn, now known as Dentons, which became Chanel’s long-term private law firm. Over the decades, she drafted the contract of the French company’s top executives.

An elegant yet discreet figure, she was active well into her later years, going to her office in the tony 8th arrondissement until the COVID-19 pandemic, according to French media. On the law firm’s website, she still held the position of senior counsel, with a specialty in contract law as well as distribution and intellectual property law.

Heilbronn is survived by her three sons and eight grandchildren.

Buyer of 3 per cent of world’s coffee holds less than $200mn in fixed-price contracts, down from $1bn in 2019

Starbucks has slashed its use of hedges against coffee price shocks even as the price of beans has soared, raising concerns that it may be unusually exposed to market swings. 

The world’s largest café chain held less than $200mn worth of fixed-price contracts for so-called green, or unroasted, coffee at the end of its fiscal year in September, according to its newly filed annual report, down from $1bn as recently as 2019. 

The decline has occurred at a time when roasters confront supply deficits after persistently poor crops in major exporters such as Brazil. Benchmark coffee futures rose above $3 a pound in New York on Friday to a 13-year high, following a more than 70 per cent gain in the past 12 months. 

Starbucks buys 3 per cent of the world’s coffee to supply its 40,000 cafés and retail businesses. A team based in Lausanne, Switzerland manages purchasing high-quality arabica beans under a subsidiary named the Starbucks Coffee Trading Company. The decline in the value of its fixed-price contracts has attracted attention on Wall Street. 

“They are substantially less hedged than they used to be. It makes the next 12 months of coffee prices more important than they’ve ever been,” said Gregory Francfort, a restaurant analyst at Guggenheim Securities. 

New Starbucks chief executive Brian Niccol is in the the early stages of a plan to revive flagging sales at cafés. One of his goals is to restore its appeal as a community coffee house. “At Starbucks, coffee comes first,” he said in video remarks last month. 

The company is not alone among roasters in letting price-cover slip during an explosive market rally. Data from the US commodity futures regulator shows commercial traders have sharply reduced their contracts to buy arabica.

A coffee trader familiar with Starbucks’ operations says the majority of its purchases are made with so-called “price-to-be-fixed” contracts, which establish a quantity, delivery month and the amount of price premium to New York’s futures market. The final purchase price is agreed later.

“When a market rallies significantly and quickly, as coffee has done, the roasting community in general tends to let coverage decline,” the trader said.

Starbucks’ 56 “tier one” suppliers range from global commodities trading houses such as Louis Dreyfus and Olam to farmer co-operatives. The company in 2021 said it bought 800mn lbs of coffee annually — an amount that would cost $2.4bn at current benchmark prices. 

Starbucks had $1.1bn in green coffee purchase obligations on its books as of September, according to its annual report.

The company buys green coffee using two types of contracts: fixed-price and price-to-be-fixed, according to its annual report. For the latter, the company also uses derivatives contracts to insure against market gyrations. 

“Like others, right now we’re remaining agile in a very dynamic market,” Starbucks said in response to questions. “An example of that agility is that our current priced coverage is slightly lower than our typical range of 9-18 months.”  

Starbucks executives rarely discuss coffee hedging with Wall Street, but in 2021 — another period of furious price rises — then-CEO Kevin Johnson told analysts the company purchased 12 to 18 months in advance, and at the time had locked in prices for the next 14 months.

“We may be the only large buyer of green coffee that uses this approach, and that will serve us well as it gives us a significant advantage relative to our competitors who, if they don’t buy this far in advance, will certainly not have that cost structure that we put in place,” he said.

The value of Starbucks’ price-to-be-fixed contracts has fluctuated, ending the fiscal year in September at $929mn, according to the annual report.

That sum was more than a year ago, but well below levels of 2021 and 2022. Coffee derivatives contracts held by Starbucks were worth $154mn, the lowest September value since 2020. 

Starbucks’ coffee trading operation is headed by Andres Berron, an eight-year employee of the company, according to his LinkedIn page. The company declined to make him available for comment. 

Starbucks said its approach to purchasing coffee hasn’t changed. The company pointed out that its current stocks of physical coffee are a cushion against volatility in the spot market.

Inventories of unroasted and roasted beans combined were worth about $920mn as of September, according to the annual report, the lowest fiscal year-end figure since 2021. 

“We keep a healthy and ample green coffee inventory that outpaces other roasters,” Starbucks said. 

Global coffee production has been rocked by poor weather. The US Department of Agriculture last week cut its production forecast for Brazil, the top supplier, citing irregular rainfall and high temperatures that could depress its next harvest. 

“The global coffee market just can’t seem to catch a break,” said Kona Haque, a commodities analyst at ED&F Man in London. “Just when you think maybe this year we’re going to get a big crop and finally get back to a surplus and rebuild our stocks, you get another adverse-weather event in either Brazil or Vietnam, and things get tight again.” 

“Because markets now are tighter than usual, there is upward pressure on prices,” she added. “In a rising price environment, clearly you want to be hedged. You do not want to be exposed to rising spot prices.” 

Ukraine war pushes Europe into a race to build up its defence base

The focus on industrial capacity is vital but change must come as fast as possible to make a difference to European security

The Biden administration’s decision to let Ukraine conduct Atacms strikes inside Russia illustrates a reality of modern warfare: industrial capacity now shapes deterrence as powerfully as political will. As Washington creates a narrow window for Ukraine to employ American precision strike capabilities before January’s transition to a Trump presidency, European powers are racing to rebuild their defence industrial base for a more uncertain future.

Last month’s UK-German Trinity House Agreement underscores the trend. Their commitment to “rapidly develop brand-new extended deep strike weapons” represents more than military co-operation. It’s an acknowledgment that peacetime production models cannot meet the demands of sustained high-intensity conflict. When German defence minister Boris Pistorius speaks of “what these times require”, he’s articulating a new industrial imperative that could reshape Europe’s defence sector.

The timing is crucial. At roughly $1.3mn a pop, every American Atacms missile fired at North Korean positions in Kursk or Russian logistics nodes is a costly loss of capability irreplaceable until production lines adapt. As the US moves from Atacms to the Precision Strike Missile system, manufacturers must maintain legacy systems while ramping up next-generation capacity.

Such constraints force hard choices about immediate battlefield impact versus long-term deterrence requirements. Joe Biden’s protracted hesitation over Ukraine’s strike capabilities reflected this reality. In particular, Pentagon officials focused on how Nato’s decade of defence austerity had created vulnerabilities to Kremlin pressure.

Washington’s scepticism about European strategic autonomy has been well founded, given the EU’s fractured defence priorities amid rising far-right influence. Yet Brussels’ rollout of an unprecedented unified defence industrial strategy signals an emerging appetite for change.

Europe is starting to grasp that defence industrial capacity has become as crucial to diplomatic leverage as military heft. The Trinity House pact paves the way for a new artillery gun barrel factory in the UK, supporting 400 jobs and promising nearly £500mn in economic benefits. More significantly, it could reduce British and German reliance on US precision strike systems.

This industrial realignment comes as German Chancellor Olaf Scholz conducted his first conversation with Vladimir Putin in nearly two years. The timing — just weeks after the defence accord with Britain — shows how industrial capacity undergirds diplomatic engagement. European leaders are increasingly framing support for Ukraine in terms of sustainable production capability rather than immediate military aid.

In contrast to Washington, which is racing against a political calendar that could see sharp policy shifts under Donald Trump, European powers are building industrial capacity that can survive political transitions. A Franco-British-German alignment on precision strike capabilities is a hedge against potential changes in US strategic priorities.

For defence manufacturers, this creates opportunity and urgency. Storm Shadow missiles’ effectiveness against high-value targets in Crimea has confirmed the value of precision strike capabilities. Yet current production rates cannot sustain high-intensity operations while maintaining deterrent stockpiles. European defence firms must scale up production capacity at a pace not seen since the cold war.

The industrial shift goes beyond missiles. The Trinity House pact — with its extra focus on unmanned systems, underwater defence and integrated air capabilities — signals a deeper transformation of European defence manufacturing. Rheinmetall CEO Armin Papperger’s pledge to bolster UK defence technology leadership with German knowhow reflects the new approach.

The next six months will test whether this industrial mobilisation can meaningfully affect battlefield dynamics in Ukraine. As Putin and Kim Jong Un calculate their responses to expanded western strike capabilities, they’re betting against industrial capacity rather than military capability.

For investors and policymakers, the message is that European security will depend on industrial policy as much as military strategy. Along with Storm Shadow strikes in Ukraine, innovations in defence industrial co-operation suggest that European powers understand this. The question is whether their defence industrial base can adapt quickly enough to matter.