KNDS IPO: 144-Year Family Dynasty Exits as Governments Cement Decade-Long Veto Over €15bn Float

The Wegmann family is walking away from KNDS after more than a century, clearing the way for a July market debut that has been slashed in value by as much as €10bn. The German clan, which has controlled the tank maker since 1881, is selling its entire stake — but the buyers are not the usual IPO crowd. France’s state holding Giat Industries and the German government are engineering a structure that locks both countries into a mutual veto for ten years.

Under the deal, Giat and the Wegmann family are offloading roughly 20% of KNDS to institutional investors, with the Bundesrepublik Deutschland acquiring a 40% block directly from Wegmann & Co through state-owned bank KfW. That transaction still needs a sign-off from the parliamentary budget committee. The company’s valuation has been set at €15bn to €18bn, a steep discount to the €25bn figure that circulated earlier this year. Retail investors have been shut out entirely — only institutions can participate.

A Governance Cage for the Next Decade

The most distinctive feature of the IPO is the control framework that binds Paris and Berlin. Neither side can reduce its stake below 30% without the other’s consent for ten full years. Germany also secures a blocking minority on the supervisory board, three board seats, and so-called golden shares that guarantee influence over German subsidiaries. KNDS chairman Tom Enders described Berlin’s entry as “a strong vote of confidence in KNDS and its future.” Long-term shareholders will receive double voting rights after two years, an attempt to inject stability into a sector prone to geopolitical shocks.

The political nature of the ownership structure was underscored by Rheinmetall’s failed attempt to buy into KNDS. The Düsseldorf-based rival was blocked by the two governments, a reminder of how strategically sensitive the company’s equity is.

Should investors sell immediately? Or is it worth buying KNDS?

Record Orders Meet a Margin Squeeze

KNDS goes public with a bulging order book. The backlog hit a record €33.1bn in 2025, more than seven times the annual revenue of €4.4bn. That year’s EBIT margin stood at 15%, with free cash flow of €980m. For 2026, management forecasts around 30% revenue growth but warns that the EBIT margin will slip to about 12%, dragged down by ramp-up costs for large domestic programmes and the expiry of unusually profitable legacy contracts.

The company has set a medium-term revenue target of €11bn to €12bn annually. Dividends are expected to start after 2027, with a payout ratio of roughly 40% of net profit from the 2026 financial year.

A €500m US Artillery Prize Looms

A potential catalyst sits on the horizon. The US Army is expected to award a contract for up to 500 new howitzers in July, a deal that could open the world’s largest defence market to KNDS. The company is bidding jointly with Leonardo DRS, facing stiff competition from Hanwha and Rheinmetall. A win would provide a powerful counterweight to the scepticism that has dragged down European defence stocks — Rheinmetall has lost about a quarter of its market value this year, and a separate €500m frigate contract loss sent its shares down 13% on Wednesday.

The IPO’s subscription window for institutional investors opens in July, with the first listing pencilled for July 13. The transaction is being handled by Bank of America, Deutsche Bank, Goldman Sachs and Société Générale. Whether the depressed valuation holds will depend heavily on whether that US artillery decision falls in KNDS’s favour at the same time.