KNDS Courts Carmakers for Tank Production Capacity Ahead of €15bn Dual Listing

The Franco-German tank builder KNDS is racing to solve a problem that could define its public market debut: how to nearly quadruple annual output of vehicles like the Boxer when existing plants are already running hot. CEO Jean-Paul Alary has been knocking on the doors of Volkswagen and Mercedes-Benz, scouting spare factory floors in Osnabrück, Ludwigsfelde and Berlin. At the Mercedes site in Berlin-Köpenick, Sprinter vans and Boxer wheeled armoured vehicles would initially roll off parallel lines before KNDS takes over the entire plant and absorbs roughly 2,000 workers. The strategy extends beyond Germany: a new facility in Levanger, Norway, began production in May and is on track to churn out up to 36 Leopard tanks a year from the third quarter of 2026. The ambition is to sixfold Boxer production by 2030.

That capacity push comes with a record order book to fill. KNDS enters the dual listing in Paris and Frankfurt, slated for the week of 13 July, carrying a backlog of €33.1bn – more than seven times last year’s revenue of €4.4bn. The group posted an operating profit of €661mn in 2025, equivalent to a 15% margin, and is targeting roughly 30% revenue growth this year. Medium-term, management sees annual sales climbing to between €11bn and €12bn. Shareholders who stick around for at least two years will be rewarded with double voting rights, and from 2027 the company plans to pay out around 40% of net profit as dividends, using 2026 earnings as the base.

However, the earnings trajectory will dip before it rises again. The adjusted EBIT margin is expected to slide to about 12% in 2026 as KNDS ramps up large national programmes and lets high-margin legacy contracts run off. The temporary squeeze underscores the cost of the industrial transformation under way. To ease the burden, KNDS has struck a strategic partnership with the Dräxlmaier Group and already operates a dedicated Boxer 8×8 production line at its Munich-Allach site, where ten drive modules are assembled each month.

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

The IPO itself is strictly a secondary transaction. Up to 20% of existing shares will change hands, with all proceeds flowing to the seller – the Wegmann family, which has controlled the business since 1881 – rather than into the company. The buyer in the anchor placement is the state-owned KfW, which will take 40% directly from the family, while the French state trims its holding. Both governments have locked themselves in for a decade: neither can reduce its stake below 30% without the other’s approval, creating a mutual veto that effectively keeps KNDS under state control. Only institutional investors can participate in the listing, orchestrated by Bank of America, Deutsche Bank, Goldman Sachs and Société Générale.

The valuation story has downsized sharply. Early market whispers put KNDS at up to €25bn; those estimates later slid to €15bn–€18bn and now hover in a €12bn–€15bn range. The wider European defence sector has taken a beating, with direct rival Rheinmetall losing roughly a quarter of its market value this year and dropping as much as 18% in a single session when reports emerged that Germany was shelving plans for large warships. Morningstar’s chief strategist Michael Field attributes the sell-off to growing investor doubt that European governments will follow through on promised defence spending increases. Despite the record backlog, near-term sentiment for the sector remains under pressure.

KNDS is therefore heading for a market debut that will test whether a state-heavily governed structure – complete with a decade-long lock-up, veto rights and no fresh equity – can command a valuation comparable to that of Rheinmetall. The answer should become clearer in the weeks leading up to mid-July.

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