Governance Dispute Trims KNDS IPO Valuation as €33bn Backlog Fails to Soothe Political Jitters
13.06.2026 - 14:25:16 | boerse-global.de
The road to a summer flotation for KNDS NV has taken an unexpected detour, with the planned Frankfurt and Paris dual listing now carrying a markedly lower price tag. Once valued at as much as €25bn, the deutsch-french defence giant's expected market capitalisation has slipped into a range of €18bn to €20bn, as a row with Berlin over state veto rights and mounting uncertainty over Europe's flagship armoured vehicle programme chill investor sentiment.
At the heart of the valuation downgrade lies a governance stand-off. The German government is seeking veto powers over strategic decisions in exchange for a 40% stake in KNDS — a mirror image of the stake Paris is negotiating. Berlin’s demands reflect its desire to control sensitive defence technology and the integration of German and French industrial components. Management has pushed back, warning that excessive political interference would cripple the company's operational agility. No deal has yet been reached, and the stalemate is weighing on the IPO's pricing.
The political brinkmanship is compounded by cracks in the Main Ground Combat System (MGCS), a joint project between KNDS Deutschland, KNDS France, Rheinmetall and Thales. Rheinmetall chief Armin Papperger warned last week that France could halve its budget for the next-generation tank programme, threatening an outright withdrawal. Since the project launched in 2017, the four industrial partners have collectively received just €25m — a fraction of what is needed for such a complex undertaking, with series production not expected until the 2040s against a backdrop of rising budget pressures in Paris.
Against this uncertainty, KNDS Deutschland and Rheinmetall are pushing ahead with the Leopard 3 as a fallback. Based on the Leopard 2A-RC-3.0 platform, the new tank is expected to enter service in the early 2030s, providing a concrete revenue stream for the Bundeswehr and NATO allies regardless of whether MGCS ever materialises. Regulatory clearance for joint development has already been obtained.
Should investors sell immediately? Or is it worth buying KNDS?
Industrial fundamentals, meanwhile, remain rock-solid. KNDS ended the period with a confirmed order backlog of €33.1bn — a figure that reached over €33bn in the most recent count — after revenue rose by nearly 16% to €4.4bn in 2025. Order intake over the past 18 months surged 41%, including more than 300 Leopard tanks for European neighbours, and the company secured €13.5bn in new contracts in 2024 alone. Margins improved and the balance sheet was further strengthened by the sale of shares in gearbox specialist Renk in May, which netted €262m. A damning internal probe into a legacy arms deal with Qatar came back clean, and auditors PwC have cleared the accounts — removing a critical hurdle.
A potential game-changer is looming on the other side of the Atlantic. KNDS, together with Leonardo DRS, is competing for the US Army's artillery programme, a contract for 500 systems that could move into production by 2028. A prototype decision is expected in July 2026. KNDS is fielding heavier vehicles equipped with the German AGM turret module to meet the Pentagon's demand for extremely well-protected wheeled howitzers. A win would be a major breakthrough outside Europe and could transform the IPO's reception.
Even after listing, the shareholder structure will remain tightly controlled. Germany and France will together own roughly 80% of the equity, with each planning to cut its holding to 30% over the next three years. The free float will be around 20% — unusually narrow for a group of this industrial heft. KNDS aims to raise about €5bn, representing a quarter of its equity, in the IPO.
KNDS at a turning point? This analysis reveals what investors need to know now.
The next few weeks are critical. The Eurosatory defence exhibition in Paris, starting June 15, is widely seen as the last realistic opportunity to show clarity on the governance front before a formal intention to float. If the US Army contract decision falls within the subscription period, demand could spike dramatically. Without that American joker, the €20bn valuation will have to be defended by purely operational arguments — and the political clouds still need to clear.
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