KNDS IPO: Buying Car Plants While Czech Shares Tumble by Nearly Half
Published on 07/01/2026 at 03:54 | Redaktion boerse-global.de
When a defence contractor starts scouting for disused automotive factories, it is usually a sign of runaway demand. KNDS is doing exactly that. The Franco-German tank maker is in talks to take over former Mercedes and Volkswagen production sites in Berlin, Osnabrück and Ludwigsfelde — just weeks ahead of its initial public offering on 13 July in Frankfurt and Paris.
The company booked a record order backlog of €33.1bn at the end of 2025, yet cannot build fast enough. That capacity crunch is driving a €750m investment push this year alone. A new Boxer armoured vehicle line is running in Munich-Allach, and a Norwegian plant in Levanger started operations in May, with capacity to produce up to 36 Leopard tanks annually from the third quarter of 2026. CEO Jean-Paul Alary confirmed the talks to repurpose former car plants in Germany. In Berlin, KNDS will initially share the Mercedes facility, building Sprinter vans alongside armoured Boxer vehicles, before taking full control.
The need for industrial real estate stems from the same bureaucracy that complicates the IPO: dual state control. France’s GIAT Industries and Germany’s KfW — which is buying out the Wegmann family’s full 40% stake for as much as €7.2bn — will each hold 40% after the listing. The remaining 20% heads to institutional investors in a pure secondary offering that raises no fresh capital for KNDS. Both anchor shareholders have agreed to a ten-year lock-up, and any sale below the 30% threshold requires the other side’s nod.
Should investors sell immediately? Or is it worth buying KNDS?
Cash is not the problem. Revenue reached €4.4bn in 2024, up 16% year on year, with an EBIT of €661m and free cash flow of €980m. The medium-term target is far more ambitious: annual sales of €11bn to €12bn by the middle of the decade, driven largely by a threefold revenue increase at the German Land Systems unit. But margins will take a short-term hit. The EBIT margin is expected to slide to around 12% in 2026 from 15% in 2024, as the company ramps up large domestic programmes and profitable legacy contracts phase out. The recovery is pencilled in for 2027, when the first dividend — at a 40% payout ratio — is promised for 2027.
One wild card could land during the bookbuilding itself. The US Army is expected to decide in July on a contract for up to 500 CAESAR howitzer systems, with production starting in 2028. KNDS is bidding alongside Leonardo DRS, which would act as prime contractor. A win would open the world’s largest defence market, but would also require shifting production and final assembly to the US within two years, doubling capacity from 24 to 48 systems per year.
That transatlantic prospect might be exactly what the order book needs. European defence stocks have suffered a sharp sell-off since early 2026. Rheinmetall, the closest public comparable, has lost about a quarter of its market value — including an 18% one-day plunge. Institutional investors are questioning whether promised government spending increases will translate quickly enough into profits.
A more sobering reference point is the Czechoslovak Group, which listed in January 2026 at €25 per share. By the end of June, the stock had slumped to around €12.97 — a loss of nearly 48%. The same banks leading the KNDS transaction — Bank of America, Deutsche Bank, Goldman Sachs and Société Générale — are likely watching that trajectory as closely as the official price range. With only 20% of shares free-float and two states holding veto power, the market is being asked to swallow a thinly traded, tightly controlled company at a time when the defence sector's momentum has stalled. The factory floor may be buzzing, but the trading floor will decide whether that is enough.
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