The larger official manufacturer of Swiss Army knives, Victorinox, has taken over its much smaller competitor and only rival, Wenger in canton Jura.
The acquisition means that knife production of the genuine article will remain safely in Swiss hands, and jobs that were under threat at Wenger in Delémont are saved.
"Keeping the Swiss cross in Swiss hands is the best way to move forward," commented Victorinox director Carl Elsener, adding that the purchase would allow the firms to compete better against international competition from cheap copies.
The two makers of Swiss Army knives, which will keep their identities separate under the deal, have been struggling to make headway since the September 2001 terrorist attacks in the United States.
Although airline passengers can buy the knives in duty free stores, they are not allowed to take them on aircraft as hand luggage because of security concerns.
Airport screening machines spot anything suspiciously sharp or pointed, including the coveted knives with their characteristic Swiss cross on the red handle.
The two companies, which are both family-run, said in a statement on Tuesday that Wenger needed greater financial backing to restructure its activities and be in a position to return to profitability in 2006.
Wenger's production facilities will remain in Delémont and there will be no job losses there, the companies said.
Knife sales at Victorinox last year were SFr169 million ($142.4 million), compared with Wenger’s sales of SFr23 million. Neither company discloses profit figures nor is quoted on the Swiss stock exchange.
"What better news could the 150 employees at Wenger and the representatives of the local business community hear this morning?" asked Jean-Jacques Gunzinger, a Wenger board member. "This is the best possible solution for Wenger."
Victorinox and Wenger evenly share the rights to provide the Swiss military with knives, although demand has dropped over the past few years because of a declining number of army personnel.
Together the two companies make about 25.7 million knives a year, which are exported to around 150 countries.
The new Victorinox group, which will have a turnover of SFr400 million, employs more than 1,500 people.
In a reaction to the move, the government of canton Jura commented that the news was "a great relief".
swissinfo with agencies
The army knife supplied to Swiss soldiers is distinctive in that it has anodised (silver-coloured) handles. It features the Swiss cross on the handle.
Wenger and Victorinox, of Ibach in central Switzerland, share orders from the Swiss army.
Victorinox, Europe’s largest cutlery manufacturer, has about a 70% market share in Swiss Army knives, while Wenger has the remaining 30%.
Victorinox was founded in 1884, while Wenger was established nine years later.
They are the only two companies legally allowed to produce Swiss Army knives.
Illegal copies are common in the United States.
After the 2001 terrorist attacks in the US, the companies lost between 15% and 20% of turnover as business at duty-free outlets slumped.
The knives were no longer allowed in hand luggage on planes.
In compliance with the JTI standards