Workers assemble Leopard 2A7 main battle tanks at the KNDS heavy weapons factory on August 01, 2025 in Kassel, Germany.
Sean Gallup | Getty Images News | Getty Images
Tankmaker KNDS has officially announced its intention to proceed with an IPO, saying on Wednesday that it plans to list shares in both Paris and Frankfurt to support its ambition to become a European defense powerhouse.
KNDS is among Europe’s leading manufacturers of land systems with its flagship Leopard 2 battle tank as well as other armored vehicles and artillery systems.
It’s broadly viewed as one of Europe’s strategically significant defense companies, supplying NATO forces and militaries globally.
But a flotation would come at a time when investors are questioning whether Europe’s defense spending boom can live up to expectations. While governments have pledged hundreds of billions of euros toward rearmament and military modernization, defense stocks have retreated sharply from their highs as investors grow skeptical that promised spending will translate into earnings growth quickly enough.
KNDS’s forthcoming listing is expected to see the sale of up to 20% of the company’s existing share capital by its current shareholders, GIAT Industries — a holding company owned by the French state — and various German families through the holding company Wegmann & Co.
Shares will be sold directly to institutional investors, with no retail offering.
On Monday, Germany announced it was planning to take a 40% stake in KNDS, which it said would “secure long-term influence over a company that is strategically important for European security and defense capabilities.” Germany’s budget committee is expected to formally adopt the decision this week.
France, which currently owns 50% of KNDS, would sell 10% of its holding to put it on par with Germany, leaving about 20% of shares to float.
Announcing the IPO on Wednesday, KNDS Chief Executive Jean-Paul Alary said that Europe was “entering a new era of defense and security” as militaries are “modernizing at speed and rebuilding critical land defense capabilities.”
An IPO is “a natural next step for KNDS,” Alary said about the already widely anticipated listing. The statement did not specify the timing or pricing of the IPO. Media reports have suggested a valuation could range between 15 billion and 18 billion euros, down from earlier reported estimates of around 25 billion euros.
A joint statement by the French and German governments on Monday highlighted a possible IPO “in the near future,” adding that their joint ownership of the company and the Franco-German framework would strengthen their common sovereignty in land defense.
In 2025, KNDS reported revenue of 4.4 billion euros ($5 billion) and 661 million euros in earnings before interest and tax. On Wednesday, it said it aimed for between 11 billion and 12 billion euros in annual revenue in the medium term.
Defense selloff
The announcements come as European defense stocks have sold off in recent months, following a years-long boom as governments committed to stepping up defense spending amid the wars in Ukraine and the Middle East.
On Wednesday, defense stocks fell even further after media reports said Germany was scrapping plans to build large warships in what would have been its largest commission since the Second World War. Shares of KNDS’ German peer Rheinmetall, which was expected to become the lead contractor for the program, fell as much as 18% on the news, with other European heavyweights down mid-single digits by midday trading.
The downturn in market sentiment this year largely stems from investor skepticism that European and G7 governments will follow through with their promises on bigger defense budgets, thereby constraining companies’ growth, according to Morningstar Chief Equity Market Strategist Michael Field.
While Morningstar is bullish on the overall defense sector, citing ever-growing order books, it expects that stocks will remain under pressure in the short term, given that the U.S.-Iran war looks like it’s coming to an end, and the Ukraine-Russia peace talks progress.
“If you look at the traditional methods of valuing companies, like price to earnings, some of these companies look very expensive, but if you actually work out what they’re going to earn over the next 10 years… It’s very attractive relative to what the valuations look like for the companies,” Field told CNBC on Tuesday, ahead of the IPO announcement.
“It’s a pretty good time to be investing [in defense]. I’m not sure it’s a great time to be IPO-ing.”
