Maker of tanks and howitzers joins European defense boom with IPO in France, Germany

KNDS, the Franco-German maker of Leopard 2 tanks and Caesar howitzers, said on Wednesday it planned to list its shares in Frankfurt and Paris in the latest initial public offering from the defence industry this year.

The company will sell 20% of its share capital in the IPO, with proceeds going entirely to existing shareholders, it said. It will be one of the biggest European defence IPOs in recent years.

Czech arms group CSG completed the biggest-ever defence IPO in January, valuing the company at 25 billion euros, while German warship builder TKMS TKMS.DE reached a 5.15 billion euro valuation in its stock market debut in October 2025.

An agreement for Germany to purchase a stake in KNDS valued it at 15 billion to 18 billion euros, a source familiar with the matter told Reuters previously. The company is likely to be valued at around 15 billion euros in the IPO, another source familiar with the matter said on Wednesday.

Germany will pay more than the IPO price for its 40% stake in the company under a formula that includes a customary control premium and post-listing share performance, according to a document seen by Reuters late on Tuesday.

PRESSURE ON DEFENCE VALUATIONS

Europe's defence industry has seen a rally in defence company shares and new listings following Russia's invasion of Ukraine and a shift in U.S. foreign policy under President Donald Trump that has driven a step-up in defence investment by the region's governments. That rally has since cooled.

Defence and aerospace stocks continued to be volatile this week, with .SXPARO falling 1.7% on Wednesday morning.

Fellow German defence group Rheinmetall RHMG.DE slipped 12.3% after a report said that the country is set to scrap plans to build its biggest warship since World War Two and intends to buy eight smaller frigates from rival TKMS.

The German Armed Forces are KNDS' largest client.

EQUAL STAKES FOR GERMANY AND FRANCE

Germany and France will each hold 40% stakes in the company after the listing, the company said.

The arrangement is part of Berlin's effort to preserve parity with the French state following the IPO.

Germany and France have agreed that, over the next 10 years, they may only reduce their shareholdings to below 30% with the other party's consent.

As long as they remain above the 30% mark, they may each appoint three members to the KNDS board of directors. Both parties must agree on important decisions within the board.

KNDS was created in 2015 through the merger of France's Nexter and Germany's Krauss-Maffei Wegmann (KMW).

($1 = 0.8801 euros)

-Reporting by Maria Rugamer and Florence Loeve; Editing by Matt Scuffham/Reuters