This includes extensive regulations on, among other things, how the protection of intellectual property on German products such as the Leopard, the Boxer wheeled armored vehicle or the Puma infantry fighting vehicle remains in Germany. Although the company has been merged for more than ten years, the Germans and French have so far developed their weapon systems completely separately under the KNDS umbrella. The federal government was worried that if the families left, they would lose control of the intellectual property and the strategic development of the company.
The owner families originally wanted to list their shares on the stock exchange. They abandoned this plan over the summer when arms stocks fell significantly in value on the stock exchanges. Wegmann then intended to "consider selling their shares as part of an M&A transaction with other foreign investors," according to a confidential briefing to parliament by the Federal Ministry of Finance, which SPIEGEL has received. Among others, the Czech CSG Group was interested in joining KNDS. Such a scenario "would significantly jeopardize German security interests in the key technology 'protected and armored vehicles'," writes the federal government, justifying the now planned purchase of the shares.
The purchase price is derived from the valuation of the KNDS Group in advance of the planned IPO. According to SPIEGEL information, this amounted to 11.2 billion euros. In addition to half of this sum for the 50 percent share, the federal government added another billion for the family. This results in the purchase price of 6.6 billion euros.
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The reason for the surcharge is that the expected annual profit should flow proportionately to the owner families. In 2025, KNDS earned almost a billion euros. In order to justify a distribution of one billion to families alone, the profit would have to at least double. The group did not provide any earnings forecast for the current financial year. The KNDS families are said to have originally targeted a sales price of eight to ten billion euros for their share.
The level of the purchase price is causing unrest in parliamentary circles. The owner families, it is said, made a pretty good deal with it. MPs recall that just last week the price of KNDS competitor Rheinmetall collapsed on the stock exchange. Since the beginning of the year, the Düsseldorf company's share price has almost halved.
The stock exchange plans for KNDS are not off the table with the federal government's entry. The federal government wants to part with part of the 50 percent as soon as possible. “It is the intention of the federal government to sell off 10% of the shares together with France as soon as possible,” it says in the briefing to parliamentarians.
Whether the federal government then makes good business with its tank shares depends, among other things, on how the order situation for KNDS develops. The same applies to possible dividends, half of which will go to the German state in the future. Curiously, the federal government itself is the most important client for the German-French arms manufacturer, ahead of France.
Among other things, the BAAINBw procurement office ordered 200 Pumas last year for 4.2 billion euros; KNDS produces the armored personnel carrier together with Rheinmetall. The federal government is spending almost three billion euros on 105 examples of the Leopard 2 main battle tank.
The fight is still ongoing for potentially the largest order for KNDS. As part of the Arminius procurement program, 1,800 wheeled armored vehicles of the Boxer type are to be procured in a first tranche, which can be used both as a transport vehicle and as a weapons carrier for self-propelled howitzers or anti-aircraft guns such as the Skyranger from Rheinmetall. The federal government should consider ordering more than 5,000 of the all-purpose vehicle in the long term. However, even the order for the first tranche has been repeatedly delayed. Armaments experts such as Moritz Schularick from the Kiel Institute for the World Economy doubt that such large fleets of classic tanks are needed given the growing importance of drones and unmanned ground vehicles.
KNDS is only likely to get this clarity after joining the state. Management has repeatedly made it clear in recent months that it prefers an IPO to nationalization. The chairman of the supervisory board, Tom Enders, objected to excessive political influence. The failed attempt to develop a next-generation fighter jet in the German-French joint project FCAS is a chilling example.
KNDS itself faces major strategic challenges and has to assert itself against new competitors who are developing unmanned combat systems. The management around the French Jean-Paul Alary and the German Florian Hohenwarter had announced that the German and French parts would grow closer together in order to become more efficient. New, politically motivated trench warfare could complicate such plans.
