From Auto Plants to Artillery Deals: KNDS Tackles €33bn Backlog with Factory Conversions and US Army Traction

German-French defense group KNDS plans Frankfurt-Paris IPO, converting auto plants into armored vehicle factories amid record €33.1B backlog and cleared audit hurdle.

The road to KNDS's dual listing in Frankfurt and Paris is being paved with production lines — and not just for Leopard tanks. The German-French defense group is negotiating with Volkswagen and Mercedes-Benz to take over idle automotive plants in Osnabrück and Ludwigsfelde, converting them into armored-vehicle factories. CEO Jean-Paul Alary confirmed the talks on May 26, with a €1 billion budget earmarked for new German capacity and roughly 2,000 staff set to transfer. At Ludwigsfelde near Berlin, Mercedes’ Sprinter vans would share the floor with military vehicles before handing over the entire site. In Osnabrück, however, Israeli defense group Rafael has already signed a letter of intent, setting the stage for a bidding war.

The urgency stems from a record order backlog of €33.1 billion — and production is struggling to keep pace. While KNDS has a new assembly plant in Levanger, Norway, able to deliver up to 36 Leopard 2A8NO tanks annually, and a fresh 155mm ammunition line in Belgium, the German capacity expansion is the strategic centerpiece. Land Systems Germany revenue jumped 17.4% to €2.5 billion in fiscal 2025, the French division rose 9.6% to €1.3 billion, and ammunition sales soared 24.7% to €612 million. Operating profit hit €661 million, lifting the EBIT margin from 13.2% to 15.0%.

Demand for KNDS's artillery systems is meanwhile pulling in new directions. On June 3, American Rheinmetall announced that the RCH 155 — offered with KNDS as partner — has been selected as the solution proposal for the US Army’s Mobile Tactical Cannon program. The announcement is not a contract award or final selection, but it positions the fully automated 155mm L52 howitzer, capable of more than eight rounds per minute and a range of up to 54 kilometers, squarely in the US modernization pipeline. That visibility adds a fresh product-demand thread to the IPO narrative, which until now was dominated by timing, governance and ownership structure.

Parallel to the US push, General Dynamics Land Systems–Canada unveiled the Grizzly LAV 155mm at the CANSEC 2026 show in Ottawa — a self-propelled howitzer that mounts the KNDS RCH 155 turret on a modified LAV 6.0 chassis. KNDS Deutschland is supplying the 155mm artillery weapon for the platform, which targets Canada’s indirect fire support modernisation. Neither the US nor Canadian developments represent firm orders yet, but they follow a sizeable European win: the UK government ordered 72 RCH 155 howitzers in May, worth nearly £1 billion, via OCCAR and the ARTEC joint venture between KNDS and Rheinmetall.

One critical hurdle has been cleared for the IPO. PwC had refused to certify KNDS's 2025 annual accounts until law firm Freshfields finished investigating a 2013 Qatar contract, covering delivery of 24 self-propelled howitzers and 62 Leopard 2 tanks worth around €1.89 billion, with a focus on commission payments. By late May 2026, the probe had advanced enough for PwC to release the figures; no criminal violations were found. The compliance sign-off removes a key sticking point for investors.

On the technology front, the EuroPULS joint venture with Elbit Systems reached a new operational readiness level on June 1. The partnership aims to produce rocket artillery for European forces, with Germany planning to procure roughly 500 MARS-3 launchers and having already ordered five systems — delivery and certification are slated for 2027.

The IPO itself continues to target 2026 with a dual listing in Frankfurt and Paris. The banks — Bank of America, Deutsche Bank, Goldman Sachs and Société Générale — have trimmed the valuation range from an initial €25 billion to €18-20 billion. The German state plans to take a 40% stake via KfW at the IPO price, with a subsequent reduction to 30% within two to three years. Only 20% of the capital will be floated, keeping free float tight and potentially deterring some institutional investors. The preferred launch windows are June or July, with September as a fallback. If June proves realistic, the next few weeks will determine whether auto plants truly become tank factories — and whether Europe’s largest defense IPO gets the green light.