From Panzer to Production Lines: KNDS Brings Autoworkers and a 10-Year State Veto to July’s €15bn Float

The Franco-German tank maker KNDS will lean on car factories to solve a capacity crunch even as it locks two European governments into a decade of control over its shares. Next month’s dual listing in Paris and Frankfurt, expected to value the group at up to €15bn, marks the end of a 144-year family era for the Wegmann dynasty and the start of a heavily state-orchestrated public life.

Chief executive Jean-Paul Alary confirmed in late May that the company is in talks with Volkswagen and Mercedes-Benz to take over plants in Osnabrück and Ludwigsfelde. In Berlin, the plan calls for Sprinter vans and Boxer wheeled armoured vehicles to roll off the same line initially, with KNDS eventually assuming full control of the site. Around 2,000 employees would change employer under the arrangement. The move reflects a dire need for industrial capacity: KNDS’s order backlog has swelled to €33.1bn, more than seven times last year’s revenue of €4.4bn, and demand for tanks such as the Leopard 2 and Leclerc far outstrips available factory space.

Alongside the carmaker partnerships, KNDS is expanding its own facilities. A new production line for the Boxer is already running in Munich-Allach, supported by a strategic pact with automotive supplier Dräxlmaier Group. The company aims to produce six times as many Boxer systems by 2030. In Norway, a plant in Levanger began operations in May and will churn out up to 36 Leopard tanks annually from the third quarter of 2026.

That record order book, together with an operating profit of €661m last year (a 15% margin), forms the core of the investment case. For the current financial year, management forecasts revenue growth of roughly 30% over 2025. However, the adjusted operating margin is expected to slide to around 12% as IPO costs and the ramp-up of large national programmes weigh on profitability. Medium-term targets remain ambitious: annual sales of €11bn to €12bn, an EBIT margin of 14-15% and cumulative free cash flow of €2.5bn to €3bn, fuelled by a sustained European defence spending boom.

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The share structure is designed to keep that boom under tight state supervision. Friday’s vote by the German budget committee cemented a 40/40/20 split: France’s GIAT Industries will hold 40%, Germany’s KfW will take another 40% (acquired from private shareholder Wegmann & Co GmbH), and the remaining 20% will be placed with institutional investors via a private placement. No new capital is raised — the IPO consists entirely of the sale of existing stakes.

Both governments have committed to a ten-year holding period, during which neither GIAT nor KfW may reduce its stake below 30% without the other’s consent. A loyalty share scheme grants double voting rights to investors who hold their shares for at least two years. Germany has also adopted a security agreement mirroring France’s existing “golden share”, giving both countries veto power over strategic decisions. The supervisory board will be expanded to 12 members — five independent directors and three representatives from each state shareholder.

A dividend policy has been set: KNDS intends to pay out roughly 40% of net profit, with the first distribution due in 2027. The listing is scheduled for the week starting July 13, with a banking syndicate led by Goldman Sachs and Deutsche Bank handling the transaction.

The market backdrop, however, is less forgiving than the order book. European defence stocks have corrected sharply in recent months: direct rival Rheinmetall has lost about a quarter of its market value this year as investors grow sceptical about the speed of government defence procurement. KNDS must now prove it can convert its €33bn pipeline into cash fast enough to justify the €15bn price tag — even as it retools car plants to make tanks.