Hungary's government to privatise majority of its stake in the defence industry

BUDAPEST (Reuters) -Hungary's government plans to sell a large slice of its stake in its defence industry, which includes a holding in Rheinmetall's local factory, to 4iG Group, the Economy Ministry said late on Wednesday.

The move comes as nationalist Prime Minister Viktor Orban's government gears up for an election next year, where he is facing his strongest challenge since he returned to power in 2010.

Under the terms of the plan, state-owned N7 Holding, which owns stakes in nine defence industry companies, will transfer ownership of the assets to a newly established subsidiary, N7 Defence Zrt.

4iG subsidiary 4iG SDT will then buy a 75% plus one vote majority in N7 Defence Zrt. The rest of the shares will still be owned by the Hungarian government.

The government said it estimates the sale to be worth up to 82.8 billion forints ($238.4 million).

The deal includes the government's stake in German defence contractor Rheinmetall's Hungarian subsidiary, the Airbus Helicopters factory, and a firearms factory.

Hungary announced a programme to modernise and rearm its military in 2017. Since then, it has bought tanks, helicopters and air defence systems, and invited foreign companies to invest and set up manufacturing plants on its territory.

Germany's Rheinmetall started the production of its new Lynx infantry fighting vehicle in Hungary in 2023.

Hungary is a NATO member state that shares a border with Ukraine where Russia's February 2022 invasion started the deadliest war on European soil in more than 70 years.

4iG has in recent years become Hungary's dominant information and communications technology group through acquisitions, lucrative state contracts and organic growth.

Its CEO Gellert Jaszai accompanied Orban to Mar-a-Lago in December 2024 where, according to his LinkedIn page, he met U.S. President Donald Trump and Elon Musk.

4iG's share price was up 6.4% by 0722 GMT on Thursday.

Opposition leader Peter Magyar said in a statement that the privatisation plan was "tantamount to treason" and urged the government to halt the transaction. According to several polls, Magyar's centre-right Tisza party is ahead of Orban's Fidesz.

($1 = 347.32 forints)

(Reporting by Anita Komuves; Editing by Jan Harvey)