KNDS Targets Auto Plants for Tank Production as IPO Looms with Government Stake in Play

KNDS negotiates to acquire Mercedes-Benz's Ludwigsfelde plant, planning a €1B investment to build military vehicles amid surging European defense orders and a potential IPO in 2026.

The German-French armored vehicle maker KNDS is pushing deep into the automotive industry in search of production space, with talks to acquire Mercedes-Benz's plant in Ludwigsfelde near Berlin at the center of the strategy. The company is weighing an investment of roughly one billion euros at the site, which would be repurposed to build military vehicles — a move that dovetails with a potential Bundeswehr order for up to 3,000 Boxer infantry fighting vehicles.

The Ludwigsfelde factory currently employs about 2,000 people, and KNDS is negotiating not only a full takeover but also an interim leasing arrangement that would allow it to start production while Mercedes continues assembling vans on part of the premises. A company spokesman confirmed that KNDS is scouting for industrial partners to accelerate its output ramp-up, driven by a surge in European army orders for tanks, armored vehicles, and artillery systems that has strained existing capacity.

Parallel to the factory talks, Berlin is weighing a direct equity stake in KNDS of between 30 and 40 percent, according to sources familiar with the matter. The company is currently a joint venture split equally between the French state and the German Wegmann family. That ownership structure has attracted a rival bid from the Czech munitions group CSG (Czechoslovak Group), which has tabled a largely cash-financed offer for part of the Wegmann family's holding. Jefferies analysts consider a successful CSG takeover unlikely, given the strategic importance of KNDS to both France and Germany. CSG's position is further complicated by its existing role as a supplier — it produces chassis for the Caesar howitzer and recently won an order for 150 hulls for the Leopard 2A8 variant.

The industrial push comes as KNDS prepares for an initial public offering scheduled for July 2026. Investment banks and financial sources have pegged the company's market value at between 15 billion and 20 billion euros, with some advisers narrowing the range to 18–20 billion euros — a downward revision from earlier estimates of up to 25 billion euros. The IPO will enter a challenging market environment: rival Rheinmetall has shed roughly 30 percent of its market capitalization since the start of the year.

Operationally, KNDS has little to complain about. Order intake hit a record 11.2 billion euros in 2024, up more than 40 percent year on year, and the order backlog swelled to around 23.5 billion euros. Revenue climbed to 3.8 billion euros from 3.3 billion euros the prior year, with all business segments contributing to growth and profitability above industry benchmarks. The company has also locked in contracts for 350 Leopard 2 tanks across five countries, underscoring the sustained demand that is straining its production lines.

A second automotive site has also caught KNDS's attention: Volkswagen's plant in Osnabrück, where car production is set to end by 2027. But that location is not uncontested. Israel's Rafael Advanced Defense Systems has already signed a letter of intent to take over the facility, meaning KNDS would have to outmaneuver another defense player if it wants to secure that capacity for Boxer production.

With the IPO window narrowing and a potential government stake on the table, the next few weeks will be critical. KNDS needs to convert its record order book into actual deliveries, and factory space — whether in Ludwigsfelde, Osnabrück, or elsewhere — is the key to turning that promise into reality.