Deutz acquires drone parts maker Sobek in defence push

(Reuters) -German engine maker Deutz said on Tuesday that it will acquire Sobek Group, a manufacturer of electric drive systems for drones, in a push to expand into the defence sector.

"Through Sobek, we can gain direct access to the rapidly growing defence market and make strategic inroads in this sector beyond the sale of conventional drive systems," chief executive Sebastian Schulte said in a statement.

Deutz said it expects to complete the acquisition of Sobek, which also supplies parts to Formula 1 teams, imminently and has secured financing through credit lines.

The company added that it may support the transaction through a capital increase from authorized capital of no more than 10% of the current share capital.

"Investors will probably like the step into the military drones market, although acquisition isn't cheap and (a) cap hike looms," said a local trader.

Shares in Deutz rose 5% in pre-market indications at 0550 GMT.

Companies seeking to profit from governments' ramped-up military spending are increasingly pivoting towards the defence sector.

Earlier this year, Schulte flagged his company's interest in the defence sector relating to engines, power packs, retrofitting and repowering.

(Reporting by Paolo Laudani in Gdansk, Editing by Friederike Heine)