Tank maker KNDS joins European defence boom with IPO in Frankfurt, Paris

By Maria Rugamer and Florence Loeve

June 24 (Reuters) - KNDS, the Franco-German maker of Leopard 2 tanks and Caesar howitzers, said on Wednesday it planned to list its shares in Frankfurt and Paris, in the latest initial public offering from the defence industry this year.

The company will sell 20% of its share capital in the IPO, with proceeds going entirely to existing shareholders, it said. It will be one of the biggest European defence IPOs in recent years.

Czech arms group CSG completed the biggest-ever defence IPO in January, valuing the company at €25 billion ($28 billion), while German warship builder TKMS reached a €5.15 billion valuation in its stock market debut in October 2025.

An agreement for Germany to purchase a stake in KNDS valued it between €15 billion and €18 billion, a source familiar with the matter told Reuters previously. The company is likely to be valued at around €15 billion in the IPO, another source familiar with the matter said on Wednesday.

Germany will pay more than the IPO price for its 40% stake under a formula that includes a customary control premium and post-listing share performance, according to a document seen by Reuters late on Tuesday.

PRESSURE ON DEFENCE VALUATIONS

Europe's defence industry has seen a rally in defence company shares and new listings following Russia's invasion of Ukraine and a shift in U.S. foreign policy under President Donald Trump, which has driven a step-up in defence investment by European governments. That rally has since cooled.

Defence and aerospace stocks continued to be volatile this week, with Europe's benchmark index for the sector falling 1.4% by Wednesday afternoon.

German defence group Rheinmetall fell more than 18% after the country scrapped plans to build its biggest warship since World War Two and said it intended to buy eight smaller frigates from rival TKMS.

The German Armed Forces are KNDS's largest customer.

EQUAL STAKES FOR GERMANY AND FRANCE

Germany and France will hold a 40% stake each in KNDS after the listing, the company said.

The arrangement is part of Berlin's effort to preserve parity with the French state following the IPO.

Germany and France have agreed that, over the next 10 years, they may only reduce their shareholdings to below 30% with the other party's consent.

As long as they remain above the 30% mark, they may each appoint three members to the KNDS board of directors. Both countries must agree on important decisions within the board.

KNDS was created in 2015 through the merger of France's Nexter and Germany's Krauss-Maffei Wegmann.

($1 = €0.8820)

(Reporting by Maria Rugamer, Florence Loeve and Mathieu Rosemain; Editing by Matt Scuffham and Milla Nissi-Prussak)