KNDS Faces Investor Revolt as €12.5bn Valuation Demand Clashes with Sub-€12bn Bids
Published on 07/01/2026 at 19:15 | Redaktion boerse-global.de
The Franco-German defence contractor KNDS is running into a wall of investor resistance just weeks before its planned dual listing in Paris and Frankfurt. While the company’s production lines hum with activity and its order book bulges at a record €33bn, the capital markets are delivering a decidedly cooler verdict: institutional buyers have signalled they will not pay more than €12bn for the equity, a full €500m below the minimum price the current owners are prepared to accept.
The Wegmann family, which together with the French state owns 100% of the group, has drawn a red line at €12.5bn. That figure already represents a steep compromise from the internal valuation of €15bn to €18bn the owners originally had in mind. The gap between vendor expectations and investor appetite has turned the next few days into a make-or-break moment. Talks are due to continue until the end of the first week of July, and if no deal emerges, management will postpone the IPO to later in the year.
Operationally, the company is in rude health. Revenue climbed 16% last year to €4.4bn, while the EBIT margin landed at around 15%. The order backlog stood at €33.1bn at the close of 2025 — a record that locks in production well into this decade. For 2026, management is targeting 30% topline growth, though margins are expected to slip to roughly 12% as IPO-related costs and heavy investment in capacity expansion take their toll. KNDS is investing heavily in new production lines for the Leopard 2 battle tank and the CAESAR artillery system, converting a former railway rolling stock plant in Görlitz, Saxony, into a hub for tank components. The workforce there will reach 400 by year-end, and the search for additional factory sites is already under way.
Should investors sell immediately? Or is it worth buying KNDS?
The ownership structure after the IPO is a key sticking point for investors. The deal is structured as a secondary sale of up to 20% of existing shares. Under the plan, the German government will acquire a 40% stake from the Wegmann family via the state-owned development bank KfW, while the French state will also hold 40%. That leaves a free float of just 20%. Both governments have committed to a ten-year lock-up and will retain golden-share protection rights over national security decisions. Future strategic moves will require qualified majorities. For many institutional investors, that level of state control is a major drag on the price they are willing to offer.
The broader market backdrop is not helping. The European defence sector, which boomed after 2022, has lost some momentum. The Stoxx Targeted Defence Index has barely moved this year. A specific trigger for the mood shift was the German government’s cancellation of a multibillion-euro warship project, which triggered a sharp correction in Rheinmetall’s shares and prompted fund managers to rethink the reliability of future defence contracts.
Despite the headwinds, KNDS remains confident in its medium-term trajectory. The company expects annual revenue to reach as much as €12bn by mid-decade — nearly three times last year’s level. Whether the IPO will happen on schedule, or at all, now hinges on whether buyers can be persuaded to close the valuation gap in the coming days.
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