The two makers of the world-famous red multifunction Swiss pocketknives (with the iconic Swiss flag) and watches have merged.

Victorinox AG has bought its smaller rival Wenger SA, the two companies announced April 26. Both Wenger and Victorinox produce Swiss-made watches, sold in the United States under the names, respectively, of Wenger and Swiss Army.

The action keeps Wenger from near bankruptcy and ensures that an iconic Swiss product doesn’t fall into foreign hands, according to Swiss press reports. Victorinox spokesman Hans Schorno told Reuters news service it would be “unimaginable” if a foreign company bought Wenger and started making the iconic Swiss pocketknives in China or elsewhere.

The merger enables Victorinox to strengthen its position in the face of foreign competition and provides Wenger SA with the financial backing it needs to continue its activities and restructure its operations, said company officials in a joint statement. Financial details of the deal weren’t released.

According to Victorinox officials, no changes in operations for either are planned in the immediate future.

The merger saves Wenger’s factory in Delémont, in northern Switzerland, which employs 150 people. There will be no job losses, the companies said. (Victorinox, headquartered in Ibach, employs about 10 times that number worldwide.)

Under terms of the pact, Wenger becomes an independent subsidiary of Victorinox with a new board of directors, including Victorinox owner Carl Elsener Jr. Immediate plans call for repositioning Wenger products in the marketplace and “development of products based on the image of the ‘Swiss Army Knife'”; developing “synergies in marketing, information technology, and promotion” for both companies; and a return to profitability for Wenger in 2006.