The mechanics of war and the mechanics of manufacturing have converged for KNDS. While the deutsch-french defence group has been stacking up artillery contracts at a record pace, its ability to physically produce enough hardware is now the biggest variable in the run-up to its planned dual listing in Frankfurt and Paris.
CEO Jean-Paul Alary confirmed in May that the company is in talks with Volkswagen and Mercedes-Benz about taking over idled auto plants in Osnabrück and Ludwigsfelde. The plan: invest €1 billion to build new production capacity in Germany and shift roughly 2,000 workers from automotive to military manufacturing. No binding deal has been signed, but the direction is unmistakable. Europe’s defence industry, bulging with orders, is scavenging the carcass of the car sector for factory space.
The urgency is clear from the order book. KNDS closed 2025 with a backlog of €33.1 billion, up from €23.5 billion a year earlier — a jump of about 41 per cent. New orders alone totalled €13.5 billion in 2025, including more than 300 Leopard 2A8 tanks for the Czech Republic, the Netherlands and Croatia, plus additional Caesar howitzers. The UK Ministry of Defence ordered 72 RCH 155 howitzers for around £1 billion, securing roughly 100 jobs at KNDS’s Stockport site, 100 new roles at Rheinmetall in Telford and another 300 across the British supply chain. Deliveries start in 2028.
Across the Atlantic, traction is building. On 3 June, American Rheinmetall said the RCH 155 — offered in partnership with KNDS — had been selected as a solution proposal for the US Army’s Mobile Tactical Cannon programme. That is not yet a contract, but it is a clear signal. At the CANSEC 2026 exhibition in Ottawa, General Dynamics Land Systems–Canada unveiled the Grizzly LAV 155mm, a self-propelled howitzer combining KNDS’s RCH 155 turret with a modified LAV chassis. Again, no deal signed, but a solid foothold in Canada’s modernisation plans.
That strong demand is colliding with finite capacity. KNDS has flagged a need to double or triple its production capacity in the coming years. The factory conversion talks are one piece of the puzzle; a recent sale of around 5.8 million shares in gearbox maker RENK — 5.8 per cent of the capital — for €262 million is another, proceeds earmarked for capital structure optimisation.
Should investors sell immediately? Or is it worth buying KNDS?
Financially, the company is in good shape. Revenue rose 15.9 per cent to €4.4 billion in 2025, operating profit hit €661 million and the EBIT margin climbed to 15.0 per cent, up from 13.2 per cent a year earlier. KNDS attributes the improvement to operational efficiency and the execution of high-margin export contracts.
Yet the IPO narrative is fraught. The initial valuation talk of up to €25 billion has been trimmed to a range of €18 billion to €20 billion, with Bank of America, Deutsche Bank, Goldman Sachs and Société Générale leading the deal. The summer remains the preferred window, with September as a fallback. The German government, via KfW, plans to take a 40 per cent stake in the IPO and reduce it to 30 per cent over two to three years; France intends an identical stake. That leaves only 20 per cent in free float — a structure that has already drawn demands for a valuation discount from analysts, given minority shareholders would wield little influence.
Meanwhile, chatter about drone defence contracts in the Middle East has resurfaced. Alary confirmed talks with customers in the region back in March, but there is still no confirmed deal, no named client, no order value and no delivery timeline. For now, it is a demand signal, not a backlog item. If a contract materialises, it would pile more pressure on already strained production lines.
What comes next hinges on several moving parts. The securities prospectus will clarify lock-up periods and shareholder structure. Progress on the Volkswagen and Mercedes-Benz talks, plus a decision from the US Army on the Mobile Tactical Cannon programme, could reshape the story. Rheinmetall’s shares have lost a fifth of their value this year — a reminder that defence stocks are no longer automatic winners.
For KNDS, the challenge is not ambition. It is convincing the market that a company with a €33 billion order book and a factory floor still under construction is worth the price tag.
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