Germany has finalized an agreement with KNDS NV's German family owners to purchase a 40% stake in the Franco-German tank manufacturer. This acquisition is set to occur before KNDS's initial public offering (IPO) scheduled for this summer. The deal aims to ensure Germany has significant influence over KNDS, a major supplier of military equipment like the Leopard 2 battle tanks, aligning its stake with that of the French government.
The terms of the agreement stipulate that Germany will buy shares at the IPO price. Initially, both the German state and the French state will hold 40% each. However, both governments plan to gradually reduce their stakes to 30% within a period of two to three years post-IPO. This structure is intended to maintain a balance of power and ensure both nations have comparable rights and influence within the company despite the eventual reduction in ownership.
KNDS, formed from the merger of France's Nexter and Germany's Krauss-Maffei Wegmann, is currently pressing forward with its dual listing plans in Frankfurt and Paris, capitalizing on increased demand for defense assets. The company recently sold most of its stake in gearbox maker Renk, raising approximately $262 million to bolster its balance sheet ahead of the listing. Initial market capitalization targets for KNDS after the float range from $15 billion to $20 billion, with the post-IPO structure initially leaving 80% state-controlled, though efforts will be made to cut public ownership over time.
