The German-French tank maker KNDS faces an enviable headache. Its order book bulges with over €33 billion in contracts — more than seven times last year’s revenue — yet the company cannot build armoured vehicles fast enough. To compound the paradox, the July 13 listing will not raise a single euro for the business. Instead, existing shareholders are selling up to a fifth of their stakes in a cash-out that could be worth up to €3 billion.
Demand for the Boxer wheeled tank alone is expected to sextuple by 2030. That has forced management to hunt for industrial capacity far beyond its own walls. CEO Jean-Paul Alary is in talks with Volkswagen and Mercedes-Benz to take over former car plants. At Mercedes’ Berlin site, the plan is to run Sprinter vans and Boxer tanks off the same assembly line before a full takeover later. The move would bring about 2,000 workers under KNDS’ control and involve investments of roughly €1 billion.
The situation in Osnabrück is trickier. Volkswagen’s plant there will end car production by 2027, but Israeli rival Rafael has already signed a letter of intent for the site. KNDS must either outbid its competitor or look elsewhere for factory space.
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The IPO itself is a pure cash-equity event. The company targets a market capitalisation of €12 billion to €15 billion, well short of the €25 billion originally floated. No new shares are issued. The German state is stepping in as an anchor investor: state-owned KfW will take a 40% stake for up to €7.2 billion, while France trims its holding to match. Together, Berlin and Paris will control 80% of the panzer builder under a strict governance pact. Both governments have locked themselves into a ten-year holding period and cannot drop below 30% without mutual consent. Germany also secures a veto. The Wegmann family, after 144 years, is exiting entirely.
Expanding into auto plants comes at a cost. The operating margin is expected to slide to around 12% as heavy startup costs from domestic projects hit the bottom line — a figure that one source attributes to the current year and another to 2026. Capital expenditure alone is eating up some €750 million. Management remains confident that once new capacity is online, margins will recover as revenue climbs into double-digit billions.
The broader market for defence stocks has turned frosty. Rheinmetall, KNDS’ direct peer, has lost a quarter of its value this year as investors question how quickly political pledges translate into earnings. Yet a potential catalyst looms. This July — right in the IPO window — the US Army will award a contract for up to 500 new howitzers. KNDS is bidding alongside Leonardo DRS against tough competition from Rheinmetall and South Korea’s Hanwha. Winning that deal would throw open the world’s biggest defence market and provide a powerful argument for the company’s multi-billion euro valuation.
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