KNDS NV, the Franco-German defense company known for producing Leopard and Leclerc tanks, has officially kicked off its initial public offering (IPO) process with plans for dual listings in Frankfurt and Paris. This move comes as European nations increase their defense spending in response to geopolitical events. The company aims to leverage this surging demand, which has already led to significant growth in earnings and sales.
The IPO strategy follows crucial agreements between the German and French governments, which will see both nations hold equal 40% stakes in KNDS. Previously, France held a 50% stake, while Germany is now acquiring its share from private family owners. This equalized ownership structure is intended to provide long-term influence and safeguard strategic interests for both countries in a company deemed vital for European security. The German government's 40% stake will be acquired from Wegmann & Co., a holding company representing the firm's family owners, pending parliamentary approval.
KNDS has reported strong financial results, with revenue rising 16% last year to $4.4 billion and operating profit reaching $661 million. The company's order backlog currently stands at an impressive $33.1 billion, equivalent to 7.5 times its annual sales. In 2025 alone, new orders totaled $13.5 billion, significantly outpacing production capabilities. While the IPO is on track for July, the German parliament's budget committee's approval of Berlin's entry is a critical near-term catalyst. Following the IPO, both governments intend to reduce their stakes to around 30% over two to three years, allowing for a free float of approximately 20%.
Despite the positive outlook, the company faces some operational challenges, including a potential rift in its flagship Franco-German tank project, the Main Ground Combat System (MGCS), with only $25 million invested so far. Rheinmetall chief Armin Papperger has warned of possible funding cuts by Paris, leading KNDS to unveil a hybrid tank, the CAPINT, and German partners to develop the Leopard 3 as a contingency. Nevertheless, KNDS's CEO, Jean-Paul Alary, has welcomed the government partnership as confirmation of the company's strategic importance for European defense, and German Economic Affairs Minister Katherina Reiche emphasized the 40% holding will protect key technologies, industrial value-added, and jobs in Germany.
