The deal is significant for the newly set up Caracal as along with Merkel, it also gets access to the German company's international reputation and markets.

Under the deal, Caracal will acquire Merkel's production factories in Germany and the United States and the distribution facilities all over the Europe and Americas. That would allow Caracal to sell its Made-in-UAE products also.

Caracal was officially launched at the International Defence Exhibition (IDEX) 2007 in Abu Dhabi in February, where it displayed its beautiful pistols, and then won a major order to supply them to the UAE government.

The value of the deal was not disclosed but Mr. Hamad Khalifa Al Neyadi, Managing director of Caracal International said that it would "soon give our company significant presence in the global markets" adding that "we now have a strong distribution networks for our products of light weapons."

Caracal will sell its own and Merkel products in the Gulf, Middle East, Asia and Africa besides the Americas.

Merkel is among the world's first gun makers, manufacturing shoulder weapons from the 16th century. In 1898, the Merkel brothers began the world's first "industrial production" of shoulder guns, while in 1914, they added a shotgun unit.

Hand-engraved for beauty, many of the old Merkel guns are now collectors' items.

Merkel owns a series of weapon production and distribution companies for different types of hunting guns. It has a staff of about 200 employees, including some engraving experts to give value addition, and produces classic and modern state-of-the-art light weapons based on the most advanced weapon industrial technologies.

Mr Al Neyadi said that over the last four years Merkel has developed and provided highly advanced equipment and is currently producing about 50 types of highly sophisticated light arms and hunting guns, with a yearly production capacity of more than 10,000 units. Merkel's products address and satisfy a wide range of hunting and sport shooter clientele around the world. This has also opened the door for technology transfer and exchange of expertise and knowledge between both sides.

Caracal is the first weapon-maker in the Gulf.

Mr Al Neyadi said that it would take the lead in developing advanced products, set new standards in design, safety and reliability, and open up a new line of research and technology in the small arms industry.

It will also produce other advanced and high-quality products and accessories that are both user friendly and provide the best value for money.