Germany to buy 50% of KNDS from German families for 6.6 billion euros

The deal and its price

Germany will buy the 50% stake in KNDS held by the German owning families, the Bode and Braunbehrens families, who hold it through the Wegmann holding. Sources in parliamentary circles told Spiegel, and then Handelsblatt and other outlets, that the price is 6.6 billion euros. The government had agreed the deal with the families the previous week, but had kept the exact sum secret. The purchase contract is expected to be signed in November.

How the price was set

According to Der Spiegel, the price rests on a valuation of KNDS at 11.2 billion euros, made before the planned initial public offering, plus a premium of one billion euros. That premium is partly justified by the expected 2026 annual profit, which should still flow to the families in proportion to their share. A parliamentary budget committee document had said only that the price for 50% was below the up to 7.2 billion euros originally reserved in the summer for 40%.

Why Berlin wants the stake

The government sees the deal as strategically important given the changing security situation in Europe. Berlin wants influence in KNDS comparable to France's and wants to avoid being outvoted on key decisions, according to a finance ministry document prepared for the Bundestag budget committee. Officials also want to keep control of intellectual property and the development of German weapon designs, such as the Leopard tank, the Boxer armoured vehicle and the Puma infantry fighting vehicle. Berlin feared that after the families exited, the shares could pass to foreign investors, and the Czech group CSG had shown interest.

The failed listing

The families had first planned to bring their share to the stock exchange but dropped the plan over the summer as defence stocks fell. Earlier talk of a company value above 20 billion euros gave way to investors not accepting even the 12.5 billion euros the owners had hoped for. Germany and France still intend to reduce their stakes from 50% to 40% each through an IPO if market conditions allow.

Open questions

The government declined to comment on confidential negotiation details, calling the planned investment "a significant decision at a time when the security situation in Europe is changing considerably". The families did not wish to comment. Spiegel also reported that a planned large order of 1,800 Boxer wheeled armoured vehicles by the Bundeswehr procurement office has been delayed over disagreements about price and performance.

KNDS valuation before cancelled IPO11.2

Premium1

Reported purchase price6.6

KNDS valuation before cancelled IPO

11.2 billion euros

Premium

1 billion euros

Reported purchase price

6.6 billion euros

Data from the article text