From London to the Factory Floor: KNDS Juggles £1bn Contract, Plant Talks, and an Unfinished Audit Ahead of Summer IPO

Britain has placed a near-£1bn order for 72 of KNDS’s RCH 155 howitzers, the world’s first artillery piece capable of firing on the move. The deal, worth roughly $1.35bn, is the latest jolt of momentum for the Franco-German defence group as it races toward a dual listing planned for June or July 2026.

The contract runs through ARTEC, the joint venture between KNDS and Rheinmetall, and is administered by European procurement agency OCCAR. Rheinmetall will manufacture the weapon system at its Telford plant in England, while KNDS UK builds the Boxer drive module in Stockport. Steel comes from Sheffield Forgemasters. First deliveries are scheduled for 2028.

The RCH 155’s ability to shoot while driving is not a marketing gimmick, but a tactical necessity in an era when counter-battery radars can pinpoint firing positions in real time. The British order bolsters a backlog that already stood at a record €33.1bn at the end of 2025, up from €23.5bn a year earlier. New business last year totalled €13.5bn, including more than 300 Leopard 2A8 tanks for the Czech Republic, the Netherlands and Croatia, plus rising demand for the Caesar artillery system.

That pipeline is straining production capacity. CEO Jean-Paul Alary confirmed on 26 May that KNDS is in talks with Volkswagen and Mercedes-Benz about taking over unused factories in Ludwigsfelde and Osnabrück. In Ludwigsfelde, roughly 2,000 employees could switch from building Sprinter vans to military vehicles, with KNDS initially renting space before a full takeover. The investment earmarked for new capacity across the group is around €1bn. The Osnabrück plant is more complicated: Israel’s Rafael Advanced Defense Systems has already signed a letter of intent to acquire it, setting up a potential bidding war.

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Outside Germany, KNDS opened a new manufacturing site in Levanger, Norway, in May. Production of the Leopard 2A8NO variant starts in the third quarter of 2026, with capacity for 36 tanks per year. Of the 54 tanks ordered by Norway, 37 will be built locally and 17 in Germany. Meanwhile, in Munich Allach, a new Boxer assembly line is already churning out ten drive modules per month; the target is to increase output sixfold by 2030.

An even bigger prize may be looming across the Atlantic. The US Army is expected to issue requests for proposals for prototype 155mm self-propelled howitzers under its Mobile Tactical Cannon programme. Preference is likely to go to heavy wheeled platforms, including those using KNDS Germany’s AGM turret on 8×8 or 10×10 chassis. A decision on which bidders advance to the next stage is expected in July.

Yet the path to the public markets is not entirely clear. PricewaterhouseCoopers has withheld its audit opinion on KNDS’s 2025 financial statements pending the outcome of an internal investigation by law firm Freshfields into a 2013 deal with Qatar. That contract, worth €1.89bn, involved howitzers, Leopard tanks, services and training. No evidence of criminal behaviour by current or former employees has emerged, but PwC wants to see the final report before signing off.

The audit impasse compounds a political debate over the state’s role after the float. The German defence ministry wants to retain roughly 40% of the shares, while the economy ministry and chancellery favour 30%. Around a quarter of the capital is expected to be offered to investors. The valuation range is wide: banks peg the company at €18bn to €20bn, down from earlier estimates of €25bn, while some analysts still put the figure at €20bn to €25bn. A formal timetable cannot be confirmed until Berlin and Paris finalise their shareholder agreement.

KNDS brought in revenue of €4.4bn in 2025, with EBIT of €661m and a margin that improved from 13.2% to 15.0%. Nearly 60% of sales came from the German land systems business. The strong financial performance sits alongside a broader rearmament push in Europe. Defence minister Boris Pistorius is driving a reform that would make reservists liable for exercises up to age 45 and professional soldiers up to 65, aiming to expand Germany’s active and reserve forces to 465,000 by the mid-2030s. A cabinet vote on the draft law is scheduled for early July.

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The industry backdrop is equally active. Leonardo completed its €1.6bn takeover of Iveco’s defence business in March 2026, Elbit Systems secured a $750m contract for PULS rocket artillery from Greece, and drone maker Quantum Systems is targeting its own IPO in 2027 at a valuation of at least €10bn.

For KNDS, the coming months will test whether it can satisfy two state shareholders, win over public investors, and keep factory lines running fast enough to meet demand. The UK order proves the market is there: the question is whether the company can deliver.

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