France and Germany reach deal on tank maker KNDS, paving way for joint IPO and equal stakes

Governance accord

After lengthy negotiations, France and Germany on Monday announced a deal on the joint governance of KNDS, the Amsterdam-based maker of Leopard 2 and Leclerc main battle tanks. Under the arrangement, both states aim to become co-shareholders with equal stakes of 40 percent each, according to a joint statement issued by the French presidency and the German government. The accord ends months of wrangling over the company's future following a May pledge by Berlin to acquire a 40-percent holding when KNDS goes public.

The group is currently 50-percent owned by the French state via a holding company, with the remaining half held by the German Wegmann family, founders of Krauss-Maffei Wegmann. The family owners have agreed to sell a 40-percent stake to the German government, Bloomberg reported on June 21, quoting people familiar with the matter.

“This agreement reflects the shared determination of France and Germany to strengthen Europe's industrial and defence capabilities, to support their armed forces, and to reinforce European sovereignty in an enduring fashion.”

IPO and valuation

KNDS is now expected to launch a dual share listing on the Frankfurt and Paris stock markets, in what analysts view as one of Europe's most anticipated IPOs this year. The deal would value the group at between 15 billion and 18 billion euros ($17.20–$20.64 billion), depending on the share price a few weeks after trading begins, according to the Bloomberg report. The company's CEO, Jean-Paul Alary, said the agreement confirms KNDS's strategic role in Europe's defence capability and technological sovereignty.

After the jet fighter setback

The agreement comes just weeks after the collapse of the FCAS programme, a Franco-German effort to build a next-generation combat aircraft, which several commentators described as a severe blow to joint defence projects. Monday's deal on KNDS is thus seen as a positive signal that Paris and Berlin can still cooperate on flagship industrial initiatives.

French and German officials framed the step as essential for bolstering Europe's defence autonomy in the face of an increasingly assertive Russia and uncertainties over US security commitments. The Czech army, for instance, tested several Leopard tanks on its motorways just last week, highlighting the region's drive to modernise its forces.

“With the federal government's 40 percent stake in KNDS, we secure key technologies, industrial value creation and jobs in Germany.”

What KNDS builds

KNDS was formed in 2015 through the merger of Germany's Krauss-Maffei Wegmann and France's Nexter. Its portfolio includes the Leopard 2 main battle tank, the Leclerc tank, the Puma infantry fighting vehicle, the Boxer and Dingo armoured personnel carriers, and the Panzerhaubitze 2000 self-propelled howitzer. The company operates 34 sites worldwide, 11 of them in Germany (Hamburg, Remscheid, Mülheim an der Ruhr, Ebeleben) and 10 in France.

“This agreement confirms the strategic importance of KNDS for Europe's defence capability, industrial base and technological sovereignty.”

Next steps

The Bundestag's budget committee is due to vote on Wednesday (June 24) on the government's share acquisition plan. German officials indicated that Berlin may later reduce its stake, but no timeline was given. Once parliamentary approval is secured, the dual listing is expected to proceed before year-end.