Dutch State considering buying shares in shipbuilder Damen

The Dutch State is considering buying shares in Damen Naval, part of the shipbuilder Damen Shipyards, sources close to the government told Nieuwsuur. Damen builds naval frigates, also for other NATO countries, making it one of the most important defense companies in the Netherlands. The government regards it as a company of “strategic national importance.”

According to Nieuwsuur’s sources, the government hasn’t yet decided how many shares to buy, if any. Options range between the “golden share,” the minimum amount that gives the State veto power over strategic decisions, and a complete acquisition in which the State buys 100 percent of Damen Naval’s shares. The latter option is considered less likely.

The Cabinet has a direct interest in Damen’s continued existence, because the Netherlands has ordered frigates from the company. Having the State as a shareholder would give the company greater certainty when making high investments, and it also gives the government more certainty that the frigates it ordered will actually be delivered.

Last year, Damen came into acute financial trouble due to delays in the production of six frigates for Germany. The €7 billion order threatened to fall through. To prevent this, parliament approved €270 million in state aid for the shipbuilder, but Damen ultimately said that it did not need the support. Sources told Nieusuur that this was due to the conditions the government had attached to the money.

Damen is also facing some legal problems. The company is accused of bribing officials abroad to win more shipbuilding contracts. A corruption conviction could have massive consequences - it could bar Damen from executing Dutch government orders for years. In another case, the shipbuilder is suspected of evading the sanctions against Russia.

Both the Ministry of Defence and Damen Shipyards declined to comment on the possible state participation to Nieuwsuur.

Buying shares in the shipbuilder would be an exceptional step. The State currently holds shares in only 40 companies, mainly transport companies, energy companies, and banks, like KLM, Gasunie, and ABN Amro. In the defense sector, the State holds a 1 percent stake in Thales, a company that produces military radar systems.