The decision is a boon for Naval Group, coming three years after it abruptly lost a major contract to build 12 Barracuda submarines for Australia.

It also comes as European countries have stepped up military spending in the wake of Russia's invasion of Ukraine in February 2022.

The Netherlands picked the French firm and its Dutch partner Royal IHC over Germany's Thyssenkrupp Marine Systems (TKMS) and Swedish defence group Saab AB, which was bidding with Dutch shipyard Damen.

"With the choice of Naval Group, two naval yards didn't win and I understand that the disappointment is large," state secretary for defence Christophe van der Maat said in Den Helder, home to the country's biggest naval base.

The French firm "succeeded in offering a balanced, versatile and realistic offer. Dutch industry also has an important role to play, an important condition in the award process," he said.

Van der Maat told AFP the budget for the project had been set at 5.6 billion euros ($6.1 billion) but that Naval Group's bid had been "below" that amount.

The vessels will replace the Netherland's four Walrus class subs which entered service in the early 1990s, of which one was decommissioned last autumn so that its spare parts could be used to keep the other three in operation.

Parliament will have to approve the contract, and caretaker Prime Minister Mark Rutte's cabinet has tried to speed up the decision ever since the party of far-right winger Geert Wilders won the most votes in last November's election.

Wilders conceded Wednesday that he was unable to cobble together a coalition and the country's main parties agreed to form a "technocratic" government made up of non-politicians.

During a parliamentary debate Wednesday, Chris Stoffer from the reformist SGP party -- which is strong in Zeeland where Damen is based -- asked that "we do not let this government decide, but a new government that will decide in the interests of the Netherlands."

- European military boost -

Van der Maat has said he wants to move quickly to avoid having to withdraw the aging Walruses from service before the new submarines are ready to deploy.

He said Friday that the deal was "not only good for the navy and our security interests, but certainly also for Dutch companies and the development of our know-how".

The deal had been reported by Dutch media for days, with newspaper De Telegraaf saying the contract would be worth between four billion and six billion euros.

"The new submarines are an important step in strengthening our security," Defence Minister Kajsa Ollongren said on social media platform X.

The French defence ministry said the selection of Naval Group "will enable the Netherlands to have ocean-class submarines of the highest global standard, thus strengthening the Dutch armed forces as well as European capabilities within NATO".

- First Barracuda export -

The submarines will be built in Naval Group's shipyards, but there will also be an industrial cooperation accord to "reinforce the technological and industrial base of the Dutch defence industry", according to the defence ministry.

The first two subs are to enter service within 10 years of the contract signing.

It will be Naval Group's first exports of its Barracuda model, of which 12 were to be sold to Australia before Canberra cancelled the contract in 2021 in favour of a deal with Britain and the United States, causing a diplomatic storm.

The first Barracuda to enter service in the French navy was nuclear-powered, but the model offered to the Netherlands will have conventional diesel-electric propulsion and be smaller at 3,000 tonnes, instead of 4,500 tonnes.

"We are extremely honoured to have been selected by the Netherlands following a hard competition and to be involved in this project of strategic importance," Naval Group boss Pierre Eric Pommellet said in a statement.

France has replaced Russia as the world's second largest arms exporter behind the United States, the Stockholm International Peace Research Institute (SIPRI) said in a report on Monday.

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SAAB AB

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TELEGRAAF MEDIA GROEP