Germany takes 40% of KNDS, betting the state should own Europe's tank champion

Berlin will buy 40% of the Leopard 2 maker KNDS, matching France and clearing a €15 to €18 billion IPO. The deal shows Europe paying for rearmament two ways at once: the state buying back into legacy primes, and venture capital flooding the startups.

The German government said on Monday it would take a 40% stake in KNDS, the Franco-German manufacturer of the Leopard 2 and Leclerc tanks, according to the Associated Press. The holding matches France's and clears the last obstacle to a planned listing that Reuters reported could value the company at €15 billion to €18 billion. Berlin said the purchase would secure "long-term influence" over a company "strategically significant for European security," and a joint Franco-German statement framed it as strengthening European sovereignty over land defense.

Europe is funding its rebuild from two directions at once. The Financial Times reported this week that defense-tech startups raised $12.3 billion in venture capital in 2026, already past the $9.95 billion the sector took in across all of last year. The KNDS deal is the opposite trade: a government buying equity in a tank maker with 11,000 employees, rather than a fund backing a drone startup. The terms set out who will own one of Europe's largest weapons producers, and on what timetable.

A €6 billion buy-in and a 40/40 split

KNDS was formed in 2015 by merging Germany's Krauss-Maffei Wegmann with France's Nexter. The French state has held 50% since, and the German families behind Krauss-Maffei Wegmann hold the rest and want out. Berlin will buy a 40% stake from those families, and France will cut its own holding from 50% to 40%, leaving the two governments as equal shareholders, CNBC reported. Reuters put the cost to the German government at roughly €6 billion to €7 billion, funded through the state development bank KfW.

The purchase is timed to an IPO. KNDS plans a dual listing in Frankfurt and Paris, with the families and the French state each selling 10% into the float, which would leave about a fifth of the company in public hands. The intention-to-float notice was expected as soon as Tuesday, and the latest workable listing date is July 13, the eve of France's Bastille Day. Germany's parliamentary budget committee has to approve the spending first, and it meets Wednesday. The Associated Press reported that both governments plan to trim their stakes toward 30% within two to three years of the listing while keeping equal voting rights regardless of how many shares each holds.

A €33.1 billion backlog and a 15.9% revenue rise

KNDS reported 2025 revenue of €4.4 billion, up 15.9%, with operating profit of €661 million at a 15% margin, its annual results show. New orders reached €13.5 billion, lifting the order backlog to a record €33.1 billion from €23.5 billion a year earlier. The investment site AInvest noted that the backlog carries delivery timelines of 10 to 20 years, the long-dated visibility that lets a defense listing be sold as a stable holding rather than a cyclical one.

Firm Leopard 2 A8 commitments now exceed 300 units across the Czech Republic, the Netherlands and Croatia, KNDS said. In 2025 customers also ordered 222 Boxer wheeled fighting vehicles, 84 RCH 155 self-propelled howitzers and 200 more Puma infantry fighting vehicles, while CAESAR howitzer production expanded in France on orders from Lithuania and Croatia. Its German land-systems arm grew 17.4% to €2.5 billion, the French arm 9.6% to €1.3 billion, and the ammunition unit 24.7% to €612 million, the company reported. KNDS now supplies more than 40 armies, 24 of them European, and its results state that systems deployed in Ukraine generate "real-time operational feedback" that feeds product upgrades.

KNDS has been preparing the listing for months. It named former Airbus chief executive Tom Enders as board chairman in 2025 and lifted operating margin to 15% from 13.2% a year earlier. Two risks still hang over the float. Le Monde reported that multiple regulatory approvals are needed and might not be ready in time for a July listing, and the company has commissioned an independent investigation into a legacy 2013 arms deal with the Qatar Armed Forces, which it said was far enough along to let auditors sign off the 2025 accounts.