Czech arms group tests Berlin and Paris with offer for stake in tank maker KNDS
CSG’s move for stake in Franco-German company marks new attempt to consolidate European defence industry
Ammunition maker Czechoslovak Group has made an audacious proposal to buy a stake in Franco-German tank maker KNDS, in a move that marks a new attempt to consolidate Europe’s defence industry but is likely to meet political resistance.
CSG, whose shares have tumbled since its €30bn stock market listing in January, made the proposal to the German families that own half of Amsterdam-based KNDS in recent weeks, people familiar with the matter told the FT.
The bid is all or mostly cash, some of the people said, adding that it was not yet clear whether the proposal for CSG to take a significant stake would gain traction.
The Czech group’s approach comes as KNDS ploughs ahead with a plan for a stock market listing of its own by early July, targeting a market capitalisation of €15bn to €20bn.
However, the potential listing comes against a backdrop of falling defence stock valuations and squabbling among Chancellor Friedrich Merz’s coalition about how big a stake it should buy from the German family.
The French state also holds a stake, meaning Paris and Berlin have a political interest in the future ownership of the group and potential influence over its programme priorities and the location of its manufacturing sites.
CSG was valued at about €30bn when it listed in Amsterdam in the largest-ever defence IPO, motivating several other European defence-related companies including KNDS to press ahead with share sales to capitalise on investor interest in the sector.
However, the fortunes of arms makers have changed in recent months. CSG shares fell sharply this month after short seller Hunterbrook alleged the company had omitted information from its IPO prospectus and claimed there was “a broader pattern of undisclosed or underdisclosed insiders around CSG’s core subsidiaries and business practices”. The company has rejected the claims.
KNDS, CSG and a representative for the families declined to comment.