The Saudis are losing patience over Berlin's foot-dragging on a deal, worth $6.5 billion, to deliver 270 Leopard combat tanks, which is the subject of fierce controversy in Germany, the newspaper said.

As a result, Riyadh is considering awarding the contract to US giant General Dynamics.

Handelsblatt also reported that KMW was in "advanced" merger talks with French rival Nexter.
Handelsblatt daily cited industry sources as saying on Friday that a deal for Saudi Arabia to buy M1 Abrams tanks from General Dynamics was already in sight.

General Dynamics and Krauss-Maffei Wegmann were not immediately available for comment.
According to other unconfirmed media reports, Germany gave pre-approval for the export of 270 Leopard 2 tanks to Saudi Arabia in 2011.

Defense sources in Germany have said that the German government wanted to hold off making a decision until after federal elections in September, and Handelsblatt speculated on Friday that Saudi Arabia was no longer willing to wait.

Arms exports are a sensitive issue in Germany given its Nazi past as well as the role arms makers such as Krupp played in feeding 19th and 20th century wars with exports to both sides of conflicts.

Peer Steinbrueck, a leader of the opposition Social Democrats running against German Chancellor Angela Merkel in the election, has criticized her government for letting arms exports surge.

NJF/NJF