KNDS’s Summer IPO Faces Dual Pressure from Berlin’s Veto Demand and Slashed Valuation
13.06.2026 - 19:13:25 | boerse-global.de
The Franco-German defence champion KNDS is hurtling toward a June or July dual listing in Paris and Frankfurt with a record €33.1bn order book and a freshly cleared audit, but the path to market is becoming increasingly tangled. A fierce power struggle between Berlin and Paris over boardroom control has already forced the underwriting banks to slash the target valuation from €25bn to €20bn, and the final pricetag could hinge on a Pentagon artillery decision that may land during the subscription period itself.
At the heart of the governance dispute is a demand from the German defence ministry for a veto right over personnel decisions made by the French chief executive. Berlin, which in May secured a 40% stake in KNDS via the state-owned KfW bank, wants to curb the CEO’s ability unilaterally to appoint or remove board members. French officials have resisted, and the stand-off is now threatening the tight timetable set by Lazard, the bank mandated to advise on the dual-listing transaction. Both governments have publicly committed to reducing their holdings to 30% each within two to three years while keeping equal voting rights, but the interim control arrangement remains unresolved.
Operationally, the group has rarely looked stronger. Revenue reached €4.4bn in 2025 and the order backlog swelled past €33bn after a year in which KNDS booked €13.5bn of new contracts, including more than 300 Leopard tanks for European neighbours. A recent Swiss order for 32 DONAR 10x10 artillery systems, together with munition containers, training equipment and logistics support, added around €919m to the pipeline, with deliveries scheduled from 2031. The company is expected to showcase a Leopard 2 A-RC 3.0 technology demonstrator and the Leclerc XLR at the Eurosatory defence fair in Paris from 15–19 June.
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Yet the rosy operational picture is clouded by the faltering next-generation Main Ground Combat System (MGCS) project, the envisaged successor to the Leopard 2 and Leclerc for the 2040s. On 13 June, Rheinmetall chief Armin Papperger openly questioned the programme’s future, drawing parallels with the failed Franco-German FCAS fighter-jet project and warning that France could again walk away. He pointed out that the three industrial partners — Rheinmetall, KNDS and Thales — have so far received only €25m in total public funding, and that the project is already behind schedule. The remarks come at an acutely sensitive moment for KNDS, which will need to convince institutional investors that the MGCS risk is manageable.
The company has, however, cleared one major due-diligence hurdle. An internal investigation into an historical arms deal with Qatar concluded with no criminal findings, and auditors at PwC have now given the accounts an unqualified sign-off, removing any audit-related obstacle to the IPO. In May, KNDS also raised €262m by selling a stake in gearbox specialist Renk, further tidying up the balance sheet.
The IPO itself is targeting roughly €5bn of primary capital, representing about a quarter of shareholders’ equity and leaving an initial free float of just 20% — an unusually thin slice for an industrial group of KNDS’s heft. After the listing, the German and French states together will still control roughly 80% of the shares, with the planned reduction to 30% each stretched across the next three years.
A wild card that could transform demand is the US Army’s artillery programme, for which KNDS is bidding jointly with Leonardo DRS. The Pentagon is seeking heavily protected wheeled howitzers, and KNDS is offering a heavier platform fitted with the German AGM turret module. A decision on prototype contracts is expected in July 2026, with a production order for up to 500 systems possible by 2028. If the army’s choice falls during the IPO subscription window, the resultant publicity could drive a scramble for the shares. Without that catalyst, KNDS’s bankers may have to work hard to defend the €20bn ceiling against a market that has lately turned bearish on European defence stocks.
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