KNDS Secures £1bn UK Artillery Deal as IPO Clock Ticks on Audit, State Stake, and Czech Bid

British Army orders 72 RCH 155 howitzers worth £1B from KNDS, as the defence firm's IPO faces valuation cuts, German state-stake dispute, and an audit delay.

The British Army has placed an order for 72 remote?controlled howitzers worth just under £1 billion, handing KNDS a major strategic contract just weeks before the tank maker’s planned summer IPO. Signed on 13 May through OCCAR, the deal covers the RCH 155 system and will be delivered via ARTEC, the joint venture shared equally with Rheinmetall. First vehicles are scheduled to roll off the production line in 2028.

Industrial?policy considerations run deep in the transaction. The Boxer drive modules — chassis, engine and drivetrain — will be built at KNDS UK in Stockport, safeguarding around 100 skilled jobs. Rheinmetall’s Telford facility stands to create another 100 positions, with a further 300 expected across the broader British supply chain. The contract fulfils commitments made under the Trinity House Agreement between Germany and the UK in October 2024.

Valuation Trimmed to Lure Investors

Yet the strong order pipeline contrasts sharply with the challenges facing the dual?listing in Frankfurt and Paris. Underwriters have trimmed the targeted equity valuation to €18 billion–€20 billion, down from earlier estimates of up to €25 billion. At the lower end, KNDS would trade at a 28% discount to Rheinmetall, making the paper attractive to institutional buyers wary of the lofty multiples seen in recent months. The Stoxx Europe Total Market Aerospace & Defence index has been in negative territory since the start of the year, and Rheinmetall itself has suffered a sharp correction since late January.

KNDS’s operating performance remains solid. Revenue climbed to €3.8 billion last year, a 17% increase year?on?year, and the order book provides long?term visibility. The first modernised PzH 2000 howitzers are already rolling off the assembly line for the Bundeswehr, alongside a continuing run of more than a hundred Leopard 2 tanks.

Berlin Tug?of?War Over State Stake

On the political front, the German government is still wrangling over the size of its planned entry into the business. The defence and finance ministries are pushing for a 40% stake, while Chancellor Friedrich Merz and the economy ministry favour a smaller 30% holding — a threshold that under Dutch law already confers a blocking minority. The French state already owns half the shares; the German side is held by the Bode and Braunbehrens families. State development bank KfW is quietly examining the mechanics of a potential acquisition.

The families have also received an unsolicited all?cash offer from Czech rival CSG for a portion of their holdings, but have waved it away, making clear that the IPO and a possible sale to the state take priority.

Audit Bottleneck Threatens Summer Window

The most immediate obstacle is neither politics nor M&A, but an outstanding audit. PwC has yet to sign off on the 2025 financial statements, pending the conclusion of an internal probe into a 2013 Qatari arms contract. That deal covered 24 PzH 2000 howitzers and 62 Leopard 2 tanks worth €1.89 billion. Law firm Freshfields has been retained to handle the investigation. The company says it has so far found no evidence of criminal conduct.

Without a clean audit, there can be no prospectus, and without a prospectus, no IPO. Management is aiming to close the review by the end of May. If PwC delivers its sign?off by then, the listing could still happen in June or July. A delay would push the window to the autumn.

Factory Talks Add Another Layer

Meanwhile, KNDS is exploring fresh production capacity. According to a Spiegel report, the company is in negotiations to take over the Mercedes?Benz plant in Ludwigsfelde, south of Berlin, initially leasing a portion of the site before a full purchase — allowing military vehicles to be assembled alongside Sprinter vans until Mercedes shifts that work to Poland by 2030. A KNDS spokesperson confirmed the company is “on a growth trajectory and looking for suitable partners for the planned production ramp?up in the defence sector.”

The situation at Volkswagen’s Osnabrück plant is more complicated. Israeli defence firm Rafael signed a letter of intent to buy the site at the end of April, and VW CEO Oliver Blume told investors that talks with defence companies are at an advanced stage.

Coordinated by Bank of America, Deutsche Bank, Goldman Sachs and Société Générale, the dual?listing structure is ready to go — but all four banks are waiting on the same thing: a green light from PwC and a political compromise in Berlin.