France and Germany settle KNDS ownership dispute, clearing path to defence-champion IPO

France and Germany have resolved a long-running dispute over the governance of KNDS, the Franco-German maker of the Leopard battle tank and the Caesar howitzer, clearing the way for one of Europe's most closely watched defence-sector stock-market listings.

In statements issued on Monday, the two governments said they had agreed on the future strategy and governance of the group and intend to co-own it through arrangements designed to give both countries equal shareholdings, equal governance rights and joint oversight of security matters. Berlin said separately that it plans to acquire a 40% stake from the company's German family owners, the Wegmann family, which has long sought to sell.

The agreement removes the central obstacle to a flotation that has been years in the making, and that Paris and Berlin now cast as a building block of European strategic autonomy.

The deal, the two governments said, "reflects the shared determination of France and Germany to strengthen Europe's industrial and defence capabilities, to support their armed forces, and to reinforce European sovereignty in an enduring fashion."

What the two governments agreed

KNDS was created in 2015 from the merger of France's state-owned Nexter and Germany's Krauss-Maffei Wegmann. Until now it has been split down the middle: the French state holds 50% through a holding company, while the Wegmann family owns the other half. The new framework reshapes that balance.

Germany will become a direct shareholder by purchasing 40% from the Wegmann family, with France adjusting its position so that the two states end up with broadly equal stakes. According to people familiar with the plans cited by the Associated Press, Paris and Berlin intend to trim their holdings to around 30% each within two to three years of a listing, while keeping equal voting rights regardless of the size of each stake. That would leave roughly a fifth of the company's shares in free float.

Germany's stake purchase values KNDS at between €15 billion and €18 billion, according to Reuters, with other estimates ranging up to €20 billion. Earlier valuations floated by the company's underwriting banks had been higher before the governance row weighed on expectations.

KNDS chief executive Jean-Paul Alary said the agreement "confirms the strategic importance of KNDS for Europe's defence capability, industrial base and technological sovereignty."

A tight timetable to a dual listing

The company is preparing a dual listing in Frankfurt and Paris that the two governments and the firm are targeting for as soon as July, a schedule that several outlets described as tight. Before that can happen, Germany's parliamentary budget committee was due to decide on the stake acquisition on Wednesday; the German defence ministry said the vote was necessary to allow the company to go public in the summer. Regulatory approvals and the final purchase agreement with the Wegmann family were still pending.

The push to bring the state in as an anchor shareholder was first floated in 2025 by German Defence Minister Boris Pistorius, who framed it as a way to protect strategic know-how and jobs. The process was then held up by disagreements over price and by the governance question of how two governments could share control of a single champion without one side dominating the other.

KNDS reported revenue of €4.4 billion in 2025 and employs more than 11,000 people, according to Euronews. Demand for its products has surged as European armies replenish stocks and back Ukraine, with the Caesar artillery system among the equipment supplied to Kyiv. The group is also central to the long-delayed Franco-German Main Ground Combat System, the project meant to deliver Europe's next-generation tank.

A test case for European consolidation

The deal lands as the European Union pushes member states to rearm and to buy more of their weapons from European suppliers. Analysts have long argued that the continent's defence industry is too fragmented to compete with American and Asian rivals, and that cross-border champions are needed to achieve scale.

KNDS, with its twin national anchors, is widely seen as a test of whether two governments can jointly steer a single industrial group. The two states framed the framework in those terms.

• Germany to buy a 40% stake from the Wegmann family, with France at a broadly equal level.
• Both states to keep equal voting rights and cut their holdings toward 30% over two to three years.
• Dual listing in Frankfurt and Paris targeted for July, valuing the group at roughly €15 billion to €18 billion.
• KNDS builds the Leopard 2 and Leclerc tanks, the Caesar howitzer and the Boxer armoured vehicle.

Why it matters for Luxembourg

The listing is unfolding against a continent-wide spending surge. At the NATO summit in The Hague in 2025, allies committed to spend 5% of GDP on defence by 2035, including 3.5% on core military needs — a steep climb from the previous 2% benchmark.

Luxembourg, one of the alliance's smallest members, has committed to raising defence spending to 2% of gross national income, with its budget set to roughly double from €728 million in 2024 toward about €1.46 billion by 2030, according to figures reported by Paperjam. Defence Minister Yuriko Backes has said the 2% level is "the level of ambition set and confirmed by all Nato allies." The government has stressed that it wants its spending to generate domestic economic returns rather than simply hit a target — a calculation that grows more consequential as Europe's tank and artillery makers consolidate into the kind of champion KNDS hopes to become.