KNDS Turns to Mercedes Factory and Renk Cash to Solve Its Capacity Crisis Before Dual Listing
23.05.2026 - 11:12:18 | boerse-global.de
The Franco-German defence group KNDS is pursuing an unconventional route to expand its production footprint, targeting a shuttered Mercedes-Benz plant near Berlin for conversion into a tank assembly line. The Ludwigsfelde facility, located just south of the capital, would absorb roughly €1bn in investment and see military vehicles initially roll off the same production lines as Sprinter vans until Mercedes relocates that output to Poland by 2030. About 2,000 automotive workers are expected to transfer to the defence contractor.
The factory grab is driven by an order backlog that has swelled to €23.5bn — more than six times last year's revenue of €3.8bn. With Bundeswehr demand for up to 3,000 Boxer wheeled armoured vehicles on the table, existing capacity is stretched to breaking point. KNDS is also assessing the Volkswagen plant in Osnabrück as a potential second conversion site.
€262m Renk Sale Fuels Factory Programme
To shore up its balance sheet ahead of the IPO, KNDS has sold part of its holding in transmission specialist Renk Group. Some 5.8m shares — equivalent to roughly 6% of Renk's capital — were placed via accelerated bookbuilding at €44.95 apiece, yielding approximately €262m. Deutsche Bank and Goldman Sachs executed the transaction, with Lazard advising the seller. Settlement occurred on 22 May.
The timing was opportunistic. Renk shares have more than trebled since their own IPO in February 2024, lifted by Europe's defence spending surge. KNDS retains a 10% stake in the business, which remains a strategic supplier of gearboxes for the Leopard 2 tank. The residual holding is locked up for 180 days.
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Proceeds are earmarked to optimise the group's capital structure as it gears up for a dual listing in Paris and Frankfurt. CEO Jean-Paul Alary insisted on 15 May that preparations remain on track, despite mounting headwinds.
Audit Logjam Threatens Summer Window
The IPO, targeting a €18bn–€20bn valuation, is pencilled in for June or July. But a dispute with auditor PwC is blocking the prospectus. PwC has refused to sign off the 2025 accounts because an internal probe into a circa €2bn contract in Qatar, dating back to 2013, is still open. Law firm Freshfields is conducting the investigation; preliminary findings point to no criminal wrongdoing, but the final report is pending.
Banks running the offering — Bank of America, Deutsche Bank, Goldman Sachs and Société Générale — have sketched a contingency plan for an autumn launch if the June window slips. The group's own planning documents describe the timeline as "extremely ambitious."
Governments Lock in 80% Control — For Now
Berlin has confirmed it will take a 40% stake in KNDS through state lender KfW, spending several billion euros. Paris will match that, giving the two governments joint control of 80% immediately after the listing. Under a governance pact, both capitals retain equal voting rights regardless of their eventual shareholding. Plans call for each to reduce its holding to 30% over three years.
Czech defence firm CSG recently expressed interest in buying into the German family shareholders' positions, but the families are prioritising the IPO and the state entry. Approximately a quarter of the shares will be floated, combining a capital increase with a secondary sell-down.
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The valuation has already been trimmed from earlier forecasts of up to €25bn, dragged lower by a weak European aerospace and defence index, which is in negative territory year-to-date. Rheinmetall has suffered a particularly sharp correction since late January.
With PwC's audit sign-off and the Berlin government's final decision both expected by the end of May, the next few weeks will determine whether the summer IPO window stays open — or whether KNDS must fund its €1bn factory conversion and the rest of its expansion from the Renk cash and existing cash flow alone.
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