The order backlog at the Franco-German defence manufacturer KNDS has reached such proportions that the company is now scouting for production space in former car factories. A record intake of €11.2 billion in new orders last year — up more than 40% from 2024 — has pushed the total order book to around €23.5 billion, securing years of revenue but also creating a pressing need for capacity. The company’s solution involves turning to idle automotive plants, including the Mercedes-Benz site in Ludwigsfelde, south of Berlin.
KNDS is in talks to initially rent part of the Ludwigsfelde facility and could later take over more of the site. The location offers industrial floor space, skilled labour and existing logistics — exactly the resources that are scarce in defence production today. Around 2,000 Mercedes workers could be affected. A second option in Osnabrück, where Volkswagen plans to end car production by 2027, has already attracted interest from Israel’s Rafael Advanced Defense Systems, which has signed a letter of intent for the site. A KNDS spokesperson described the group as “on a growth trajectory” and said discussions with potential
Beyond Germany, KNDS is also adding capacity elsewhere. In Levanger, Norway, the company opened a new production facility on 4 May for the Leopard 2A8NO, with manufacturing slated to start in the third quarter of 2026. The plant can produce up to 36 main battle tanks per year and includes test tracks, a laser lane, gradients and a water basin. The Norwegian programme covers 54 Leopard tanks, of which 17 will be built in Germany and 37 in Norway; initial vehicles were delivered to the Norwegian army at the end of April. On the artillery front, the first modernised PzH 2000 A4 howitzers began rolling off the line in May for the Bundeswehr, part of an order for 22 systems alongside a package of 123 Leopard 2 A8 tanks. Britain has also joined the customer list with a £1 billion contract for 72 remote-controlled RCH-155 howitzers on Boxer chassis, with first deliveries expected in 2028.
These operational pressures form the backdrop to KNDS’s planned initial public offering, which the company’s chief executive, Jean-Paul Alary, confirmed remains on track for 2026. KNDS has hired investment bank Lazard to advise on a dual listing in Frankfurt and Paris. Alary brushed aside recent rumours of a delay, insisting preparations are proceeding as planned. The board originally approved the move in late 2025 as a way to open access to capital markets, raise fresh funds for new technologies and expand production, while the dual listing is expected to create a more flexible corporate structure.
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Yet the path to the IPO is strewn with political and regulatory obstacles. KNDS is currently owned equally by the French state and a German family, the heirs to the former Krauss-Maffei Wegmann conglomerate, who want to reduce their stake. Berlin is eyeing an entry via the state-owned KfW bank, with Alary signalling he would welcome public ownership. But the government is split on how large a stake to take: the defence and finance ministries want 40%, while the economics ministry and Chancellor Friedrich Merz argue that 30% would be enough to block key decisions. The KfW has commissioned JPMorgan to examine the potential investment. Meanwhile, the munitions maker CSG has reportedly made an offer to the family, introducing a competitive element.
Complicating matters further, auditor PwC has yet to sign off on KNDS’s annual accounts. The delay stems from an independent investigation into corruption allegations surrounding a Qatar-related contract from 2013. The next fixed point on the calendar is the end of May, when management expects the audit to be completed. If the sign-off comes in time, the dual listing in Frankfurt and Paris could proceed in June or July. Around a quarter of the company’s capital is expected to be floated, with bankers estimating an enterprise value of €18–20 billion — lower than the earlier range that topped out at €25 billion.
Financially, the company is on solid ground. Revenue climbed to €3.8 billion in 2024 from €3.3 billion a year earlier, and the record order intake has allowed management to plough profits directly into expanding capacity. Thousands of new employees have been hired in recent months to handle the workload. The planned IPO is designed to give the group the financial flexibility needed to sustain that growth — assuming the political pieces fall into place and the auditor gives the green light.
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