German government explores KNDS stake purchase amid delayed IPO plans
Germany is discussing a potential equity move in KNDS as defence industrial policy gains importance across Europe. The talks center on a possible 50% stake purchase from the company's German owner families after market conditions worsened for an initial public offering this year.
Highlights
- Germany is in advanced talks with Wegmann Holding to acquire a 50% stake in KNDS, with both sides reportedly close on price.
- KNDS's IPO plans are on hold for 2024 after market conditions worsened, delaying prior plans for a 10% public stake sale.
- The German government is weighing a purchase alongside France to safeguard defence technology, with a decision expected within weeks.
Stake talks and ownership structure
As reported by Reuters, negotiations are ongoing between the German government and the owner families grouped under Wegmann Holding on a possible acquisition of half of KNDS, with the two sides said to be not far apart on price.KNDS is a Franco-German defence manufacturer known for producing the Leopard 2 tank. Two people close to the matter say plans for the company's stock market listing are now on hold after conditions for an IPO deteriorated this year.
Under the earlier IPO plan, the family owners and the French state, which each hold 50% of KNDS, were to sell 10% stakes to investors. The families' remaining 40% would then be sold to the German state.
Defence policy rationale and next steps
The German economy ministry says the government is considering a stake purchase on an equal footing with France in order to protect key defence industry technology. The ministry also says any decision on buying or selling shares rests with the shareholders.Handelsblatt reports that a decision is expected in the coming weeks. KNDS declines to comment on the discussions between Germany and the owner families, while a company spokesperson says an IPO remains the company's objective.
European defence shares have recently come under pressure despite expectations of rising military budgets and solid profit growth over the rest of the decade. Our earlier article explained that investors are still cautious about how quickly higher spending will turn into firm orders and production, as procurement delays, supply-chain constraints, higher borrowing costs and fast-changing military technology complicate valuations across the sector.
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