KNDS Revs Up Factory Conversion as €5bn IPO Faces Tug-of-War Over Valuation and Governance
21.06.2026 - 13:16:10 | boerse-global.de
Europe’s largest defence contractor is accelerating plans to turn a former Mercedes-Benz plant into a tank assembly line, even as a bruising political dispute between Berlin and Paris caps the valuation of its impending dual listing. KNDS has secured EU competition clearance for its ownership structure and is now racing to finalise a €5bn initial public offering that will see shares trade in both Frankfurt and Paris.
The company is in advanced talks with Volkswagen and Mercedes-Benz to repurpose idle automotive factories for military production. The most promising lead is the Mercedes site in Ludwigsfelde, where KNDS aims to produce Boxer wheeled armoured vehicles. CEO Jean-Paul Alary is personally steering the negotiations, betting that converted car plants can help meet surging European defence demand.
Yet the IPO’s price tag has already taken a hit. Lead banks Bank of America, Deutsche Bank, Goldman Sachs and Société Générale have narrowed the valuation range to €18bn–€20bn, down from earlier estimates as high as €25bn. The markdown reflects an unresolved governance conflict: Germany is demanding a veto over KNDS board appointments and wants state-owned KfW to acquire a roughly 40% stake at the IPO price, costing between €6bn and €8bn. France already holds a matching 40% stake, leaving only about 20% of shares in free float — an unusually thin slice for an industrial company of this scale.
Should investors sell immediately? Or is it worth buying KNDS?
Operational momentum remains strong. Revenue rose nearly 16% last year to €4.4bn, while operating profit climbed to €661m from €500m. The order book swelled to €33.1bn, a €10bn increase on the prior year. New contracts include a £1bn order from the British Army for 72 remote-controlled RCH 155 howitzers and a Swiss order for 32 DONAR wheeled howitzers to replace legacy M109s. In the past year alone, KNDS booked €13.5bn in new orders, covering more than 300 Leopard 2A8 tanks for European allies and a 25% jump in ammunition sales.
A potential catalyst is brewing across the Atlantic. American Rheinmetall has submitted the RCH 155 for a US Army artillery programme, with KNDS as a direct partner. A Pentagon decision is expected around July 2026. If it lands during the subscription period, investor appetite could surge. Without that trigger, the company must rely solely on its operational heft to justify the reduced valuation.
The timing of the listing has slipped. Originally slated for summer, the IPO is now pencilled in for September. Whether Berlin and Paris can resolve their governance wrangle by then will determine if the deal can proceed at the current terms. Chairman Tom Enders has publicly urged the two states to eventually exit their holdings, arguing that permanent state control is not suited to minority shareholders. The official securities prospectus is expected in the coming days, setting the binding price range.
One structural risk remains the Franco-German Main Ground Combat System (MGCS) project. Rheinmetall CEO Armin Papperger recently warned of potential French budget cuts that could derail the joint tank programme. As a fallback, KNDS and Rheinmetall are pushing ahead with the Leopard 3, which is slated for operational readiness in the early 2030s. For now, the company’s immediate focus is on getting the IPO across the line — and turning car factories into tank plants before the next wave of European defence spending arrives.
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