In a move of great geopolitical and industrial significance, the German government has decided to acquire a 40% stake in the KNDS group, Europe’s leading producer of land defense systems. The deal, announced after months of negotiations, will be completed with the group’s long-awaited listing on the Frankfurt and Paris stock exchanges in 2026.
KNDS was created in 2015 through the merger of Germany’s Krauss-Maffei Wegmann (KMW) and France’s Nexter. KMW was controlled by the Wegmann group, which is backed by descendants of historic German industrialist families, the Bode, von Braunbehrens, von Maydell and Sethe. Nexter, in turn, was owned by the French state-owned holding company GIAT Industries. German families see an opportunity to liquidate amid the rise of the defense industry after the invasion of Ukraine. Thus, with the purchase of shares by the German state, it will have 40% of the group, the French side will have the same amount and another 20% will be made available on the stock exchange.
Why is Germany taking the shares?
The main reason is to ensure a strategic balance with France. Paris retains strong influence in the group, so Berlin wanted to avoid any French dominance in decisions regarding jobs, production facilities in Germany and the development of know-how. Defense Minister Boris Pistorius pushed for 40%, while Chancellor Friedrich Merz preferred a lower percentage. The German state share will gradually decrease to 30% in the coming years, but there will be a special clause that will maintain full equivalence of rights as well as the exercise of veto on crucial issues.
The move, which is in practice an indirect German nationalization (by a state that is a bastion of the free market…), serves and secures the country’s armament plans, as KDNS produces the Leopard 2A8 tank, the Puma armored fighting vehicle, the corresponding Boxer and will develop the future main battle tank, Main Ground Combat System (MGCS). In other words, systems that the German Ministry of Defense will procure by the thousands, so it cannot leave KDNS under French control or to groups of investors on the stock exchange.
More generally, the group is a pillar of European defense autonomy. With over 11,000 employees, revenues of 3.8 billion euros in 2024 (a 17% increase from 2023) and a record of new orders of 11.2 billion, it already has pending orders worth 23.5 billion euros. In addition to armored vehicles (and the French Leclerc tank), it produces the (French-designed) Caesar self-propelled gun, the German RCH 155, the Fennek, Serval, Dingo, VBCI, Griffon vehicles, gun turrets, bridge carriers, a full range of ammunition for the army, unmanned, electronics, simulators, supply and communications systems, etc. In total, it serves 24 European armies and 19 worldwide, Greece has a huge fleet of Leopard tanks of versions 2A6, 2A4 and 1A5, as well as PzH 2000 howitzers.
