KNDS Races to Turn Car Plants into Tank Factories as Audit and Berlin Politics Cloud Summer IPO
Published on 05/19/2026 at 07:33 | Redaktion boerse-global.de
KNDS is grappling with a peculiar paradox: its order books are overflowing, yet the company is scrambling for factory floor space. The Franco-German defence group, best known for the Leopard 2 tank, is eyeing a former Mercedes-Benz plant in Ludwigsfelde, south of Berlin, as a potential manufacturing site to help meet surging demand. The move underscores the operational urgency behind the group's planned summer IPO, even as regulatory and political snags threaten to delay the listing.
The Ludwigsfelde facility, currently operated by Mercedes-Benz, could be partly rented by KNDS initially, with an option to expand. The roughly 2,000-strong workforce there is also part of the calculus — skilled labour is a scarce commodity in Europe's defence industry. A second former car plant in Osnabrück, where Volkswagen is winding down production by 2027, is also in play, though Israel's Rafael Advanced Defense Systems has already signed a letter of intent to take it over. KNDS confirmed it is in active talks to secure additional capacity for a planned production ramp-up.
That ramp-up is driven by an unprecedented influx of orders. In 2024, KNDS booked €11.2 billion in new business, a surge of more than 40% on the prior year. The record intake pushed the total order backlog to roughly €23.5 billion, while annual sales rose from €3.3 billion to €3.8 billion. All business lines contributed to the growth.
Beyond Germany, the company is expanding in Norway. On 4 May, KNDS opened a new production facility in Levanger dedicated to the Leopard 2A8NO, capable of building up to 36 main battle tanks annually. The site includes test tracks with a laser alignment course, gradients and a water basin. The Norwegian programme covers 54 tanks, with 17 to be built in Germany and 37 locally. The first vehicles were handed over to the Norwegian army in late April.
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Artillery production is also accelerating. In May, KNDS delivered the first upgraded PzH 2000 A4 howitzers to the Bundeswehr as part of a 22-unit order, alongside work on a 123-tank Leopard 2 A8 package. A separate ÂŁ1 billion contract with the UK covers 72 remote-controlled RCH-155 howitzers mounted on Boxer chassis, with initial deliveries scheduled for 2028.
The IPO bottleneck
On the financial side, the story is less straightforward. All this operational momentum should, in theory, make KNDS an attractive proposition for public investors. Yet the path to a dual listing in Frankfurt and Paris this summer is obstructed by two unresolved issues: an audit standoff and a political dispute in Berlin over the size of Germany's future stake.
The more immediate hurdle is with PwC. The auditor is refusing to sign off on KNDS's 2025 financial statements until an internal review into a 2013 Qatar contract is completed. That deal involved the sale of 24 PzH 2000 howitzers and 62 Leopard 2 tanks worth €1.89 billion. Law firm Freshfields is conducting the probe, and while preliminary findings have found no evidence of criminal conduct by current or former employees, PwC has not yet been satisfied. KNDS expects the review and audit sign-off to be finished by the end of May. Without it, the IPO prospectus cannot be published.
The political wrangling in Berlin is equally tense. The defence and finance ministries back a 40% state holding in KNDS, arguing that a strong German government stake is needed to balance French influence and prevent a future breakup of the group. The economy ministry and Chancellor Friedrich Merz favour 30%, which they believe is enough to block critical decisions. A consensus must be reached before the subscription period, pencilled in for early July, can begin.
Valuation pressure and a rival offer
The market backdrop has not helped. The European aerospace and defence index has fallen roughly 6% since the start of the year, and Rheinmetall — a direct peer — has lost about 38% since its late-January peak. Advisers now estimate KNDS's potential market capitalisation at €18 billion to €20 billion, down from earlier talk of as much as €25 billion. That valuation range will determine the price of the roughly 25% of shares expected to be sold, split between new equity and secondary sales by existing owners.
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Adding another layer of complexity, Czech defence group CSG has made an approach. It has offered to buy up to 50% of the stakes held by KNDS's German founding families, mostly in cash. The families are still committed to the IPO route, as well as a possible government stake purchase, but CSG's move is widely seen as an attempt to set a floor under the valuation — and to keep pressure on the process.
KNDS chief executive Jean-Paul Alary said on 15 May that preparations remain on track and that talks with key stakeholders are constructive. But the clock is ticking. If PwC releases the audit certificate in time and Berlin agrees on the state's share, a June or July IPO is still feasible. If either piece slips, the listing will likely move to the autumn — with CSG already waiting in the wings as an alternative.
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