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The German government has entered talks to buy a 40 per cent stake in KNDS, a decision clearing the path for a planned listing of the Franco-German tank maker before the summer.
Germany is seeking to buy the shares from the German families who currently own half of the Amsterdam-based company, on the basis of the valuation obtained in the listing, government insiders said. It has now entered talks with the shareholders including the French state, which holds 50 per cent of the company, one official said.
As part of the plan, Paris would also reduce its stake to 40 per cent to match that of Berlin’s. The intention is for France and Germany to then reduce their individual stakes to 30 per cent in the next two to three years, two people said.
Advisers to the company and shareholders say KNDS has previously said it aimed to reach a market capitalisation of €15bn to €20bn.
Tom Enders, chair of KNDS, confirmed in a statement that KNDS would be 80 per cent state controlled after the IPO but stressed that the “goal must be to significantly reduce the states’ stake over time”.
He added that national security interests could be safeguarded through “contracts and specific security agreements”.
“A key factor in the upcoming negotiations will be ensuring that KNDS now also adopts a governance structure and rules of engagement suitable for the stock market, which enable the company’s agility, competitiveness, technological and financial excellence, and further European consolidation,” he said.
At stake for Berlin is securing influence over a key supplier to the Bundeswehr, and making sure it does not favour Paris when deciding on priorities or plants. 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.
Enders had urged Berlin in a letter last month that KNDS intended to begin an IPO process within the next two months, irrespective of whether Berlin had reached a decision on taking a stake beforehand.
The warning was primarily a reflection of growing impatience from the German families who want to sell down their 50 per cent stake, as Chancellor Friedrich Merz’s coalition became stuck in an internal debate over the size of a potential holding. The defence and finance ministries were pushing for 40 per cent, while the economy ministry and chancellery were advocating for 30 per cent, according to people involved in the talks.
KNDS earlier this week reduced its stake in gearbox maker Renk to about 10 per cent through an accelerated bookbuilding process to reinforce its balance sheet ahead of the planned listing.
The Franco-German group, which owned just under 16 per cent of Renk’s shares before the disposal, raised about €262mn. KNDS said it planned to retain the remaining stake for the “foreseeable future”.
The French government did not respond to requests for comment.
