German government agrees with owner families on stake in tank manufacturer KNDS

According to information from the Reuters news agency on Sunday evening, the German government reached an agreement with Wegmann-Holding, in which the German owner families Bode and Braunbehrens are combined, on the takeover of 40 percent of the shares. Wegmann-Holding previously holds 50 percent of KNDS. In return, France declared that it would not change its own 40 percent stake for the time being. In the future, both states are to hold equal shares in the company.

The German government justified its entry on the special security policy situation. Government spokesperson Stefan Kornelius stated on Monday that a German participation secures long-term influence over a company of strategic importance for European security and defense capabilities. With this stake, the German government intends to take account of the interests of the federal government in view of the company's significance. The security and defense industry is of central importance due to the ongoing Russian threat to Europe and the war of aggression against Ukraine.

Government justification: Security situation and industrial interests

Federal Economics Minister Katherina Reiche (CDU) emphasized the industrial policy aspects of the transaction. "With the 40 percent federal stake in KNDS, we are securing key technologies, industrial value creation, and jobs in Germany," she said. She also highlighted: "In the future, Germany and France will decide on an equal footing about the development of a company that is of central importance for European defense capability." The German government wants to strengthen bilateral and European armaments cooperation in particular; cooperation with France plays a key role in this.

According to Kornelius, the German government plans to reduce the scope of its stake at a later point in time, while retaining the same governance rights in the company as France. This step is intended primarily to expand the group's market access, he said. The federal government will therefore not permanently keep its stake at the 40 percent level.

Financial dimension and IPO plans

According to the German government's assessment, KNDS is a central building block for Europe's industrial and military capacity to act. Both the Bundeswehr and the French armed forces are to continue to be supplied from the company's production facilities. Together with the French Élysée government, the German government is pursuing the goal of further developing KNDS into a leading European and global defense group.

The transaction involves considerable financial dimensions. According to Bloomberg, KNDS is being valued at 15 to 18 billion euros as part of the deal. Representatives of KNDS, the owner family, and the German Economics Ministry initially declined to comment when asked by Bloomberg. The exact sum with which the federal government is taking over the shares has not been officially quantified.

As early as May 2025, it became known that the German government was planning billion-euro investments in KNDS. At the end of May, KNDS had confirmed the planned entry of the federal government. Last week, the Börsen Zeitung had still reported that the timetable for the IPO was shaky because the German government and the owner families could not agree on the purchase price. With the agreement now reached, these hurdles are considered cleared.

Locations and industrial value creation

KNDS operates locations in Germany in Hamburg, in the North Rhine-Westphalian cities of Remscheid and Mülheim an der Ruhr, as well as in Ebeleben in Thuringia. In total, the company maintains eleven locations in Germany and ten in France out of 34 production sites worldwide. Significant parts of value creation are thus anchored in both countries.

In addition to the sale of 40 percent to the federal government, it is planned to float ten percent each from the families' ownership and from the French state's holdings on the stock exchange. This would pave the way for an IPO in Frankfurt and Paris. According to Bloomberg, the IPO is to be announced on Tuesday.

The German government and the French government had previously emphasized in a joint declaration that both states would hold equal shares in the company in the future. With the federal government's entry, the parity structure between the owner families and the French state that has existed since 2015 is being expanded by a third pillar. France declared that it wanted to retain its 40 percent stake for the time being.

The formal announcement of the agreement was scheduled for Monday. On Wednesday, the Budget Committee of the German Bundestag still has to give its approval, meeting for the last time before the summer recess. Without this parliamentary approval, the federal government cannot take over the shares. The transaction can only be executed after the committee's vote.

Parliamentary approval still pending

The agreement between Berlin, Paris, and the owner families is seen as an important signal for European armaments cooperation. In view of the changed security situation in Europe and the ongoing Russian threat, several European states have increased their defense spending and strengthened the industrial base of defense production. With the federal government's entry into KNDS, the group is gaining a reliable state anchor investor on the German side, which is to help shape its strategic direction.

At the same time, the planned reduction of the federal stake at a later point in time signals that the German government does not want to remain a major shareholder in the company permanently. With the splitting - 40 percent federal government, 40 percent France, ten percent stock exchange from family ownership, ten percent stock exchange from French state ownership - a balanced shareholder structure is to be created that ensures both state control and capital market capability.

The German government stated that the stake in KNDS would secure long-term influence over a company of strategic importance for European security and defense capability. The goal is to expand bilateral cooperation with France and to strengthen the competitiveness of the European defense industry. KNDS itself welcomed the agreement reached between Berlin and Paris.

The timetable provides for the Budget Committee of the Bundestag to decide on the transaction at its last meeting before the summer recess on Wednesday. Should the committee give the green light, the IPO in Frankfurt and Paris could be formally initiated in the following weeks. An initial listing on the stock exchanges would thus be realistic for the second half of 2026.

Effects on ownership structure and shareholder model

For the owner families Bode and Braunbehrens, the transaction means a gradual withdrawal from sole control of the company. With the reduction of their stake from 50 to ten percent and the transfer of a further ten percent to the stock exchange, their direct influence declines but is preserved through their participation in Wegmann-Holding. The step marks the end of a long phase of family majority ownership of the traditional defense manufacturer.

Should the transaction be executed as planned, KNDS would be the first major European defense company with a balanced dual pillar of German and French state participation as well as a free float on the stock exchanges in Frankfurt and Paris. Observers see the structure as a model for further European defense cooperation.

The price of 15 to 18 billion euros at which KNDS is valued as part of the transaction reflects the strategic importance of the company for the European defense industry. The German government has so far not commented on the exact level of the purchase price. Observers expect a final valuation after the Budget Committee's approval.