The German-French arms company KNDS is pushing ahead with its stock exchange plans despite political reservations from Berlin and is sticking to its original schedule.
• KNDS continues to plan its IPO without delay
• The German federal government had pushed for more time for talks
• IPO with political explosiveness
The German-French arms company KNDS continues to plan its IPO without delay. CEO Jean-Paul Alary said in a statement: “KNDS is continuing preparations for a possible IPO according to the original schedule – with the full support of shareholders and the board of directors.”
The company is continuing to examine “the earliest possible suitable market window” for the IPO, the manager said. KNDS indirectly rejected media reports that the federal government had pushed for a postponement until autumn.
The German federal government had probably hoped for a later implementation of the IPO in order to gain more time for discussions about a possible federal government entry. However, KNDS is sticking to the existing plans and has not yet been influenced by them.
KNDS IPO is considered strategically sensitive
The planned IPO of KNDS has significant political implications. The manufacturer of weapon systems such as the Leopard 2 main battle tank and the self-propelled howitzer 2000 was created from the merger of the German tank manufacturer Krauss-Maffei Wegmann and the French company Nexter and is one of the most important European arms companies.
The ownership structure is particularly sensitive. The previous owner families on the German side have been pursuing plans for a gradual withdrawal for some time. As a result, there is growing concern in Berlin about a possible loss of power on the German side.
The federal government justifies its interest with the protection of national security interests and the influence on key military technologies. KNDS itself signals openness to state entry. CEO Alary stated that KNDS would “of course welcome” a possible participation of the federal government in the shareholder group. At the same time, he made it clear that the focus remains on careful preparation for the IPO.
Federal government wants the same rights as France
Given the time pressure, the federal government has now probably made a decision about joining KNDS. Accordingly, it initially wants to acquire a 40 percent stake in the arms company, as the German Press Agency reported, citing government circles. However, she intends to reduce this stake to 30 percent over a period of two to three years.
If possible, the French state should also be persuaded to reduce its current share of 50 percent in the company. In any case, it should be guaranteed that the German and French sides have the same rights when it comes to location decisions, for example, even if the German state reduces its stake to 30 percent.
What this means for investors
For investors, KNDS remains one of the most significant potential stock market candidates in the European defense sector. The federal government’s planned entry is likely to give the company additional political stability and could be seen as a signal of confidence by parts of the market.
At the same time, the construction with a later reduction to 30 percent shows that the state is not aiming for a permanent majority role. What will now be crucial for investors is when the IPO will actually take place, what the final shareholder structure will look like and what valuation KNDS will go to the capital market at.
Thomas Zoller, editorial team at finanzen.net
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