Franco-German defence group poised to become one of Europe’s largest listed defence companies after Paris and Berlin resolve longstanding governance dispute
France and Germany have agreed to become equal shareholders in KNDS, the Franco-German manufacturer of land systems including the Leopard 2 main battle tank, clearing the final political obstacle to an initial public offering that could value the company at between €15 billion and €18 billion, according to a joint government statement and reporting by Reuters and Bloomberg.
Under the agreement, the German government will acquire a 40% stake from the family shareholders of Krauss-Maffei Wegmann, matching France’s existing holding. The remaining shares are expected to be floated through a dual listing on the Frankfurt Stock Exchange and Euronext Paris.
Reuters and Bloomberg reported that an IPO announcement could come as soon as this week. The transaction remains subject to approval by Germany’s parliamentary budget committee, the most significant remaining hurdle to the reported summer timetable.
Investment case
Formed in 2015 through the merger of Germany’s Krauss-Maffei Wegmann and France’s state-owned Nexter Systems, KNDS has become one of Europe’s leading land systems manufacturer. Its portfolio includes the Leopard 2 and Leclerc main battle tanks, Caesar self-propelled howitzers, Boxer armoured vehicles and ammunition.
The proposed flotation comes as European governments accelerate defence spending and seek to expand industrial production capacity following Russia’s invasion of Ukraine.
Revenue at the pan-European firm rose 15.9% to €4.4 billion in 2025, while EBIT reached €661 million and the operating margin improved from 13.2% to 15.0%.
The company’s order backlog stood at €33.1 billion at the end of 2025 after securing €13.5 billion of new business during the year – more than seven times annual revenue.
Ahead of the planned IPO, KNDS also monetised part of its investment in Renk Group, selling 5.8 million shares through an accelerated bookbuild in May and raising approximately €262 million to strengthen its balance sheet.
A valuation of up to €18 billion would immediately place KNDS among Europe’s largest publicly traded defence companies, alongside Rheinmetall, Leonardo and Saab.
Negotiations
The path to listing has not been straightforward, however.
Earlier reports suggested the company could achieve a valuation of as much as €25 billion before disagreements between Berlin and Paris over governance complicated preparations for the IPO.
Germany had sought additional protections over strategic decisions, reflecting concerns over sensitive defence technologies and industrial sovereignty.
Monday’s agreement resolves those issues by granting France and Germany equal governance rights irrespective of future changes to their shareholdings.
“A stake by Germany in KNDS will secure long-term influence over a company that is strategically important for European security and defence capabilities,” the German government said.
The structure means France and Germany will remain long-term anchor shareholders after the IPO which is an uncommon arrangement among Europe’s major listed defence contractors.
Execution
Attention now turns to execution. KNDS Chief Executive Jean-Paul Alary has previously said European manufacturing capacity, particularly in Germany, must expand to meet growing demand and fulfil the company’s record order backlog.
The company is also awaiting a decision on a U.S. Army artillery programme, where it is competing with Leonardo DRS to supply up to 500 self-propelled artillery systems. A prototype selection is expected in July and could provide a further boost to investor sentiment if announced before the IPO.
Beyond the listing, the transaction reflects a broader shift in European defence financing. Rather than relying solely on public spending to expand industrial capacity, governments are increasingly turning to capital markets while retaining long-term influence over strategically important manufacturers.
If completed, the KNDS flotation would rank among Europe’s largest defence IPOs and provide institutional investors with yet another new large-cap opportunity to invest directly in Europe’s rapidly expanding defence industry.