KNDS board to decide Thursday on €15 billion defense IPO

KNDS Nears IPO Decision as Board Meets Thursday on €15 Billion Listing

The board of Franco-German defense company KNDS NV is set to meet on Thursday, June 18, to decide whether to proceed with one of Europe’s most closely watched initial public offerings, Bloomberg reported. A deal could value the maker of Germany’s Leopard 2 tanks at as much as €15 billion ($17.4 billion), according to people familiar with the matter.investing

Stake Deal on the Cusp

At the center of the decision is the German family behind Krauss-Maffei Wegmann, which owns half of KNDS and has been in extended negotiations to sell a large part of its holding to the German government. The family and Berlin have exchanged proposals in recent days and are now close to a deal that would allow Germany to purchase the stake once KNDS has gone public. If an agreement is reached, KNDS could begin its IPO process as soon as Friday. A failure to finalize terms could push the listing to later in the year.investing

The German government announced in May that it intended to acquire an initial 40% stake in KNDS, matching France’s existing holding, before reducing its ownership to 30% within two to three years. Both countries would retain equal voting rights regardless of the size of their stakes.reuters

Valuation Drops From Earlier Expectations

The potential €15 billion valuation represents a steep decline from earlier projections. As recently as March, bankers expected the dual Frankfurt-Paris listing to value KNDS at around €20 billion, according to Reuters. By May, Bloomberg reported that advisers had already trimmed their forecast to a range of €18 billion to €20 billion amid a selloff in defense stocks. The further reduction to €15 billion reflects continued pressure on the sector, with the Stoxx Europe Aerospace and Defense Index retreating from earlier highs.morningstar

KNDS had been gauging investor interest since late March, when it began preliminary meetings with prospective buyers for what could raise as much as €5 billion in new capital. The company reported surging sales and profits in late May, with CEO Jean-Paul Alary reaffirming the listing remained on track.france24

A Pivotal Moment for European Defense

If the IPO moves forward, KNDS would become one of the largest newly listed defense companies in Europe. The Netherlands-headquartered firm, formed from the merger of Germany’s Krauss-Maffei Wegmann and France’s Nexter, produces the Leopard 2 battle tank and Caesar howitzer systems. Its order intake reached €11.2 billion as European nations ramped up military spending.breakingdefense

Morningstar analysts have noted that the listing faces headwinds beyond valuation, including political divisions in Berlin and the poor aftermarket performance of ammunition maker CSG, whose shares fell following its January debut.morningstar