Tank maker KNDS pushes Berlin to decide on taking stake before IPO
German family shareholders want to press ahead with listing of Paris-backed group at €15bn-€20bn valuation
Franco-German tank maker KNDS has urged the German government to decide on plans to purchase a stake in the business, warning it would press ahead with a planned stock market listing before the summer even if no agreement is struck.
Tom Enders, chair of KNDS, told Berlin in a letter last month that the group intended to begin an IPO process within the next two months irrespective of whether Berlin had reached a decision on taking a stake beforehand, according to two people with knowledge of the matter.
The listing plans have been delayed largely because Chancellor Friedrich Merz’s coalition has become embroiled in internal debate over the size of a potential holding, according to five people with knowledge of the situation.
The disagreement has hindered negotiations with the family shareholders from whom Berlin would buy a stake, including over price, they said.
After a year of talks, Enders’ warning reflects growing frustration among the German families who own half of the Amsterdam-based defence group and are seeking to exit.
An IPO without an agreement with Berlin would leave the French state, which owns the other half of KNDS, as the largest single shareholder in a key supplier to Germany’s armed forces, the Bundeswehr.
“The family doesn’t want to wait,” said one of the people. “If the German government misses the boat now, they really miss the boat.”
Advisers to the company and shareholders say KNDS is aiming to reach a market capitalisation €15bn-€20bn in an IPO by June or July, while demand for defence stocks is strong.
Valuations in the sector have surged in recent years but shares in Rheinmetall have declined almost a quarter in 2026 with sales missing analysts’ expectations. Shares in ammunition maker Czechoslovak Group, which listed in January, plummeted this month after a short seller report.
KNDS last month ordered an independent probe into bribery allegations related to a 2013 deal with Qatar’s armed forces. The company has said it expects to finalise its 2025 accounts this month. Auditor PwC will wait for the results of the investigation before signing off on the figures, the FT previously reported.
While the German government could still buy a stake after the IPO, it would then be constrained by takeover rules that require shareholders to bid for the entire company once they amass a 30 per cent holding.
At stake for Berlin is ensuring KNDS does not tilt towards Paris when deciding on programme priorities or the location of manufacturing sites.
Created in 2015 through the merger of Krauss-Maffei Wegmann and France’s Nexter, KNDS supplies Leopard 2 tanks to the German armed forces and Caesar howitzers to the French military.
The current plan is to float a minority stake — with the exact size still under discussion — with France and Germany to have equal holdings in the remainder.
However, divisions persist within the German government. The economy ministry favours a 30 per cent pre-IPO stake, while the defence ministry has pushed for a 40 per cent stake to account for possible future dilution.
Berlin is also seeking firmer commitment from Paris that France would reduce its own stake to match Germany’s holding, one of the people said.
The IPO is largely driven by the German families’ desire to sell down as much as possible and capitalise on investor interest as Germany pours hundreds of billions of euros into upgrading its military.
Within the German coalition, a decision over the stake is now at ministerial level with an intention to move quickly, according to two people with knowledge of the discussions.
One of them sought to downplay KNDS’s warning as partly tactical, saying it is in the company’s interest to strike a deal with Berlin because it would affect the size of its free float and share price.
The German and the French governments declined to comment. The families declined to comment.
KNDS said it could not comment on “internal German government discussions and [the company] shareholders’ matters”. It added that it remained focused on its strategy, including the IPO, with the full support of the board.