KNDS Paves Way for Dual Listing as Auto Plants Join the Production Line

Defence contractor KNDS targets €18-20bn valuation in Frankfurt/Paris listing, repurposes auto plants amid record €33.1bn order book.

The defence contractor KNDS is reshaping its manufacturing footprint and balance sheet ahead of a planned dual listing in Frankfurt and Paris, with talks underway to repurpose idled car factories for tank production. The moves come as the group’s record order book of €33.1bn puts it under pressure to scale capacity quickly.

In a bid to secure production space, KNDS has entered negotiations with Mercedes-Benz over the Ludwigsfelde plant near Berlin, where some 2,000 workers currently assemble Vito vans. The plan envisages a transitional phase with civilian and military output running side by side, eventually shifting to full production of the Boxer armoured vehicle. Separately, Volkswagen CEO Oliver Blume has described discussions about using the company’s Osnabrück facility for defence contracts as “promising.”

The push to absorb automotive overcapacity reflects Europe’s surging demand for heavy land systems. KNDS already supplies more than 40 armed forces worldwide with platforms such as the Leopard 2 tank and the Caesar howitzer. Last year the group booked orders worth €13.5bn, lifting its year-end backlog from €23.5bn in 2024 to €33.1bn by the close of 2025.

Revenue climbed 15.9% to €4.4bn in the 2025 financial year, driven by higher defence budgets and ramp-up in production. German land systems contributed €2.5bn, France added €1.3bn and the ammunition business grew 24.7% to €612m. Earnings before interest and tax hit €661m, lifting the operating margin to 15.0% from 13.2% a year earlier.

To help fund the expansion, KNDS sold a large block of shares in drive-systems specialist RENK back in mid-May. The placement of 5.8m shares at €45.10 each raised around €262m, reducing KNDS’s holding in the company to roughly 10%. The move clears out a peripheral investment and streamlines the group’s balance sheet ahead of its initial public offering.

The IPO, expected in June or July this year, will see a dual listing in Frankfurt and Paris. Analysts have pencilled a valuation of €18bn to €20bn for the combined entity. Political backing looks solid, with the German state development bank KfW set to take a strategic 40% stake, mirroring the French government’s existing holding. Both sides plan to reduce their stakes to 30% over the next two to three years. The state entries effectively replace the Wegmann family as the long-standing German private shareholder and are seen as a safeguard for technological sovereignty.

Beyond the auto-plant talks, KNDS is adding capacity elsewhere. An agreement with Alstom brings the Görlitz site into the production network, with initial components delivered by the end of 2025. In Belgium a new automated line for 155mm ammunition has started operations, targeting a strategic bottleneck that has emerged across European arsenals.

The dual listing will give KNDS broader access to capital markets, with proceeds earmarked for industrial projects, technology and the capacity expansion Europe’s defence push demands. With the RENK sale done and state backing locked in, the final piece now is the concrete timetable for Frankfurt and Paris.