Israeli government-owned company Rafael Advanced Defense Systems, the German state of Lower Saxony, and international Israel-founded investment fund Aurelius Capital have signed a letter of intent to acquire Volkswagen’s Osnabrück plant. The factory will be repurposed for the production of components for the Iron Dome air defense system. Confirmation of the deal came this morning after long months of complicated negotiations.
The deal that has taken shape circumvents the opposition of the Qatar investment fund, which holds 10% of Volkswagen shares, to cooperate with Rafael in the production of defense systems. The deal will save thousands of jobs at the factory, which is scheduled to be closed next year by the car giant.
Rafael said a letter of intent has been signed between the parties on the subject. "The letter of intent anchors the joint commitment of the parties to examine and formulate an agreed outline for the development of the Osnabrück site. The next stage will be detailed negotiations, an examination of the regulatory requirements and the completion of the internal approval procedures of each party. The state of Lower Saxony will support the process and actively help to advance it. The letter of intent is part of a broader process to formulate a new strategic direction for the Osnabrück site, which also receives the support of Volkswagen."
"Responsibility and economic opportunity"
Minister-President of the federal state of Lower Saxony Olaf Lies said the agreement being formed will help save critical jobs. "The letter of intent gives the Volkswagen site in Osnabrück an opportunity for the future and reflects the understanding that Osnabrück has the necessary industrial infrastructure to reposition itself in a strategic and developing area. This partnership will create high-quality, long-term job opportunities at a site that has symbolized industrial excellence for 125 years," he said.
He added, "Our defense reality has completely changed, Germany and Europe are required to strengthen their capabilities in the security and defense industries and strengthen their independence. This is at the same time a responsibility and an economic opportunity, and Osnabrück is destined to play an important role in this effort. The site's employees have repeatedly proven their ability to accomplish extraordinary achievements, and it is on this solid human infrastructure that we seek to build the future."
Rafael CEO Yoav Tourgeman said, "At the heart of the partnership is proven, groundbreaking technology, designed to provide a response to current threats and prepare for future challenges. Rafael's solutions, which have proven their operational effectiveness in the field, are constantly evolving to stay one step ahead of threats and ensure the best protection at all times. Today, we are laying the foundations for a long-term industrial partnership with our partners in Germany, in which the technology will be manufactured entirely in Germany and will contribute to strengthening the security of Germany in particular and Europe in general." Germany, it should be noted, has not yet purchased the Iron Dome system.
Aurelius Capital cofounder and partner Tomer Jacob said, "We at Aurelius are very proud to collaborate with Rafael and transform an advanced automotive plant in Osnabrück into a leading defense production center. This move is made possible thanks to Rafael's groundbreaking technology, the very important partnership of the Lower Saxony government and the close cooperation with Volkswagen and aims to ensure the strengthening of the security of Germany and Israel, and the creation of significant value for all. This is just the first step in a strategic cooperation that will grow stronger over time."
Published by Globes, Israel business news - en.globes.co.il - on September 7, 2026.
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