German Labor Union Pushes for Parity as KNDS IPO Nears Amid Franco-German Tensions

Tank maker KNDS eyes €25B dual listing in Frankfurt and Paris amid political dispute over German state stake and union demands for parity.

The countdown to one of Europe’s most anticipated defense sector listings is underway, but political friction between Berlin and Paris threatens to overshadow the summer debut of tank maker KNDS. While the company’s order books are overflowing and a banking consortium is ready to execute a dual listing in Frankfurt and Paris, a battle over future control of the business is intensifying behind closed doors.

At the heart of the dispute is the planned exit of the German family that owns Krauss-Maffei Wegmann, which together with the French state currently controls the armored vehicle manufacturer. Berlin is exploring a stake purchase through state-owned development bank KfW, with insiders indicating the government is targeting a blocking minority of just over 25%. That falls short of what Germany’s powerful IG Metall union is demanding. Deputy chairman Jürgen Kerner is calling for full parity with France, arguing that only equal ownership can safeguard German technology and jobs. The federal government has so far remained tight-lipped, saying only that it is reviewing the conditions for a potential entry.

The political wrangling comes as KNDS prepares to tap public markets with a valuation of up to €25 billion, according to people familiar with the matter. A sale of roughly a quarter of the shares could raise around €5 billion. A banking consortium led by Deutsche Bank and Goldman Sachs is handling preparations for the listing, which is penciled in for June or July. Investment bank Lazard is also advising on the structuring of the deal, though some sources point to a later timeline toward the end of the year.

The company urgently needs fresh capital to double its production capacity. Last year alone, KNDS secured new orders worth nearly €11 billion, pushing its total order backlog to €23.5 billion. A separate parliamentary response from the German defense ministry underscores the scale of the demand: the Bundeswehr has signed 47,000 contracts worth a combined €111 billion, with €82.7 billion allocated from the regular 2025 budget and an additional €25.5 billion from a special fund. As a lead contractor for the Leopard 2 battle tank and the Boxer armored vehicle, KNDS is a primary beneficiary of this spending spree.

To meet the surge, the company is expanding aggressively. A new production line for Boxer mission modules has opened in Munich-Allach, capable of rolling out up to ten units per month. KNDS is also outsourcing to civilian partners: the Dräxlmaier Group will now manufacture Boxer modules at its facility in Landau an der Isar, a move aimed at harnessing industrial capacity for military output. Since 2023, the company has added 5,000 new employees and established a subsidiary in Ukraine for artillery maintenance.

KNDS is also polishing its technological credentials ahead of the IPO, seeking to shed its image as a pure-play tank manufacturer. At a recent trade fair, the company unveiled a new radio system capable of controlling unmanned ground vehicles and drones. France’s defense ministry has already purchased the technology. The strategy appears to be paying off: KNDS has sold over 1,000 unmanned vehicles to 40 countries, with a particular focus on the Asia-Pacific region. The diversification is designed to offer investors a growth narrative that extends beyond traditional defense contracting.

CEO Jean-Paul Alary insists the timeline for the IPO remains on track, seeing no obstacles to the listing. But the clock is ticking. Without a political compromise between Berlin and Paris on the future ownership structure, the company risks valuation discounts when it finally hits the market.