The 'Globe and Mail' reported that Canada had chosen TKMS of Germany to build 12 subs for its navy. This deepens defense ties with 'Europe' ahead of a NATO summit centered around higher military spending.

Sources cited in the report stated that the announcement would be made before Canadian Prime Minister Mark Carney leaves for the two-day summit to begin on Tuesday.

The Prime Minister's Office has not responded to our request for comment. Carney was scheduled to make a security announcement in Halifax Monday afternoon. Both the German Embassy in Ottawa as well as the Canadian Defense Minister David McGuinty's office declined to comment.

TKMS is majority owned by German conglomerate Thyssenkrupp and is offering its 212CD submarine class model. It is also supplying Norway's Navy under a joint-development program.

Shares of TKMS rose up to 12.9% after the announcement, reaching their highest level in almost four months.

Canada has said that it met NATO's 2% GDP military spending goal earlier than originally planned, due to pressure from the United States. NATO leaders have agreed to spend 5% GDP on defense-related investments and the military by 2035.

Carney stated at a May defense show that both submarines proposed by Germany's Hanwha Ocean and South Korea Hanwha Ocean 042660.KS met Canadian Navy needs and that the winning bid will likely be determined by the economic benefits offered.

Carney promised in his February defense?industrial strategy that Canada will buy military equipment from its allies to "spur reinvestment" into the Canadian economy and to ensure "sovereignty over the operation and maintenance of newly acquired assets."

Hanwha Ocean has not responded to our request for comment. Carney's desire to expand trade and business with Asia would be reflected in his decision to go with South Korea.

TKMS is hoping that the 212CD, with its diamond-shaped steel and 74 metre (243 foot) length, will be the new NATO standard. TKMS CEO, Oliver?Burkhard, told the media in January that they were in discussions with Norwegian and German firms to offer a multibillion dollar package of investment?spanning battery chemicals and rare earths to?win this tender.

Burkhard said to Canadian media that TKMS would deliver four 212 CD submarines to Canada's navy by 2036. Hanwha, however, had made a similar promise a year before. Reporting by Maria Cheng and Friederike Heine; Writing by Caroline Stauffer. Editing by Howard Goller.

(source: Reuters)