French-German tank maker aims for high-risk IPO

Leonardo SpA

14/05/2026 10:54

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Pierre Briancon

BERLIN, May 14 (Reuters Breakingviews) - In the current geopolitical context, a pan-European tank and ammunition maker with a back order worth more than 4 years of revenue should be a first-class initial public offering candidate. KNDS’ listing, however, will carry the extra baggage of two government shareholders, France and Germany, with the latter still debating how large a stake it wants in the group. The upcoming IPO should be a good incentive to come up with an investor-friendly governance.

The IPO is in part caused by the desire of Wegmann Unternehmens-Holding, a family office, to sell part or all of its 50% stake in the maker of Leopard and Leclerc battle tanks. The German government wants to invest in KNDS to help balance the 50% held by the French government. Its understanding is that Paris will agree to lower its stake to the level held by Berlin.

Germany’s ruling coalition decided after much bickering that it would buy a stake of 30% to 40% in the group. Berlin would have a major influence over the company either way, given it is one of its two major customers, alongside France. But the French government hasn’t yet committed to lowering its stake. The uncertainty lends credence to the idea that the two main shareholders may bicker for industrial or even political reasons. The current standstill of the two countries' 10-year old plan to build a new generation fighter jet, the Future Combat Air System, shows those fears are not without basis. Tensions between the two capitals may intensify after current French President Emmanuel Macron leaves office, especially if the right wing Rassemblement National wins the 2027 elections.

The listing comes at a tricky time for defence IPOs: ammunition maker CSG’s CSG.AS shares have more than halved since its January debut amid a short-selling campaign. Most defence stocks are also down since mid-January and even industry leader Rheinmetall RHMG.DE has suffered. KNDS hasn’t released its 2025 numbers yet because auditors are waiting for the results of a probe into bribery allegations that it ordered in April. Assume that revenue grew last year at the same 15% pace as in 2024 and the company could be valued at almost 14 billion euros including debt if put on a 3 times enterprise value to sales multiple, the average of defence peers CSG, Saab SAABb.ST, Thales TCFP.PA, Leonardo LDOF.MI and Rheinmetall.

Ideally, both France and Germany would agree to let their stakes fall to a level that limits their influence and gives public investors a proper say in the business, say 30% each or less. Thomas Enders, the KNDS chairman, knows that happens when France and Germany bicker. He was the Airbus AIR.PA CEO who in 2012 had to pick up the pieces of the Franco-German governance crisis that paralysed the plane maker at the turn of the century. He has good reasons not to want to live through the same kind of problems again.

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CONTEXT NEWS

Berlin has agreed to acquire a stake of 30% to 40% in Franco-German tank manufacturer KNDS ahead of a planned IPO, Der Spiegel said on its website on May 12, adding that an offer will be sent to Wegmann Unternehmens-Holding, the German family vehicle currently owning 50% of the company.

The Financial Times said on May 13 that Czechoslovak Group, the Czech ammunition maker, has approached the German holding company with an offer to buy part of its KNDS stake.

The French government owns the other 50% of KNDS.

European defence stocks have struggled this year https://www.reuters.com/graphics/BRV-BRV/egvbegqwdpq/chart.png

(Editing by Neil Unmack; Production by Shrabani Chakraborty and Streisand Neto)

((For previous columns by the author, Reuters customers can click on BRIANCON/pierre.briancon@thomsonreuters.com))