Germany to match France with 40% KNDS stake in Frankfurt IPO
Germany's Acquisition of KNDS Stake and Implications for European Defence
By Markus Wacket and Alexander Hübner
Germany's Stake Acquisition Details
BERLIN, May 20 (Reuters) - Germany will acquire a 40% stake in Franco-German defence equipment group KNDS when it lists on the stock market, a German official said on Wednesday, matching the size of France's stake in the maker of the Leopard tank.
Both governments would be expected to reduce their stakes to 30% over the next two to three years, but both would hold equal voting rights regardless of the size of each stake, said the official, who spoke on condition of anonymity.
Background of the KNDS Agreement
The agreement followed weeks of negotiations between the two governments over KNDS, now jointly owned by the French government and the German family owners of the former Krauss-Maffei Wegmann (KMW). KMW was merged with France's Nexter into KNDS.
IPO and Valuation
The families aim to divest their entire stake via an initial public offering in Frankfurt, expected in June or July, that could value KNDS at around 20 billion euros ($23.26 billion), sources familiar with the deal told Reuters this month.
The price of the stake acquired by Germany would depend on the market price, with no premium or discount, the official said.
Leadership and Governance Perspectives
KNDS Chairman's Statement
KNDS chairman Tom Enders welcomed the decision but said a combined level of state ownership at 80% could be "only the beginning" and said national security interests could be guaranteed by contracts and specific agreements.
"The goal must be to significantly reduce the state's stake over time," he said in a statement. "In the long run, defence companies generally do not need majority state shareholders."
Governance Structure for Stock Market
He said KNDS also had to ensure it adopted a governance structure and rules of engagement suitable for the stock market, which would underpin the company's strengths and support further European consolidation.
European Defence Context
Geopolitical Background
European defence dealmaking has come into sharp focus as relations with the U.S. have frayed under President Donald Trump. The continent has scrambled to rebuild militaries which had been allowed to wither after the Cold War ended.
KNDS Operations and Output
KNDS, which manufactures the Leopard and Leclerc XLR main battle tanks as well as Boxer armoured personnel carriers and tracked artillery vehicles and ammunition, employs around 11,000 people and generated sales of 3.8 billion euros in 2024.
Germany's Strategic Interests
Germany, which has lifted borrowing limits and set aside billions to re-equip its military, has been keen to ensure equal sway over KNDS with France to ensure it could retain influence over major decisions on issues like jobs or production sites.
Future Combat Aircraft System Project
The two countries have been deadlocked over a 100 billion euro project to develop a future combat aircraft system intended to be built around a core fighter jet supported by drones and linked by a classified "combat cloud".
Transaction Management and Additional Information
Government Oversight
Germany's Economy Ministry will manage the government's side of the transaction in coordination with the defence ministry, the German official said.
Exchange Rate and Editorial Credits
($1 = 0.8598 euros)
(Writing by James Mackenzie; Editing by Cynthia Osterman)
