KNDS Faces Steep Valuation Discount as Berlin Seeks Veto Powers Just as €33bn Backlog Hits Record

KNDS showcases Leopard 2 variants and new tank concept at Eurosatory, backed by €33.1B orders and a £1B howitzer deal, but a Paris-Berlin power struggle halves its IPO valuation to €15-20B.

Europe’s largest tank maker arrives at the Eurosatory defence expo in Paris this week with a story of two halves. On one side, the order book has swollen to €33.1 billion and a freshly inked British howitzer contract worth nearly £1 billion provides powerful momentum. On the other, a bitter governance dispute between Berlin and Paris has shaved billions off the company’s expected IPO valuation, leaving investors to weigh political risk against operational strength.

The planned dual listing in Frankfurt and Paris, originally slated for this summer, was built on the prospect of a market capitalisation of up to €25 billion. Analysts now peg the figure at between €15 billion and €20 billion. The German defence ministry has demanded a veto right over certain management decisions of the KNDS board chairman, specifically the ability to block changes in the executive team. Berlin also wants to acquire a stake of roughly 40% ahead of the listing — mirroring France’s position — at a cost of between €6 billion and €8 billion based on the current valuation range. The unresolved power struggle is holding up the finalisation of the IPO prospectus.

The underlying business, meanwhile, is firing on all cylinders. KNDS closed 2025 with total orders of €13.5 billion booked during the year, pushing the backlog 41% above the previous year’s level to €33.1 billion. Revenue rose nearly 16% to €4.4 billion, with the Land Systems Germany unit contributing €2.5 billion. The ammunition division was the fastest-growing segment, posting a 25% jump to €612 million. In a separate move, KNDS sold a 5.8% stake in the RENK Group in May 2026, pocketing around €262 million while retaining a 10% residual holding.

On the Eurosatory show floor, the group is showcasing seven systems, including the latest variants of the Leopard 2 and the Leclerc XLR, as well as a completely new battle tank concept. A global press conference is scheduled for Monday at 14:30, followed by the official debut of the technology demonstrator LEOPARD 2 A-RC 3.0 on Tuesday, June 16. The exhibition also serves as a platform for deal-making: KNDS recently secured a contract for 32 artillery systems for Switzerland and, crucially, a £1 billion order from the British Army for 72 remote-controlled RCH 155 howitzers, to be delivered through a joint venture with Rheinmetall and replacing the ageing AS-90 guns.

A critical procedural hurdle for the listing has been cleared. Internal and external auditors examined an old contract with Qatar dating from 2013 and found no violations. PwC subsequently signed off on the 2025 financial statements — a necessary precondition for any IPO. With that box ticked, KNDS will launch its roadshow with fund managers immediately after the Eurosatory ends.

A potential wild card lies across the Atlantic. American Rheinmetall has submitted the RCH 155 for a US Army artillery programme, with KNDS as a direct partner. A final Pentagon decision is pending. Should it land during the subscription period for the IPO, demand could surge. Without that stimulus, KNDS will have to justify its reduced valuation purely on operational performance, and a postponement to September is seen as the most likely fallback. Whether the company can hold its nerve — and keep Berlin and Paris on the same page — will determine whether this summer’s listing becomes a reality or slides into autumn.