Europe's Defense Sector at Peak Momentum Suddenly Hits the Brakes: Why Are France and Germany's Defense Giants Delaying Their IPO?
On July 1, KNDS, the Franco-German defense group, announced it had decided to delay its initial public offering (IPO) due to significant market volatility in Europe's defense sector. The company stated that it would resume the IPO process only when market conditions improve. This listing plan, officially unveiled just on June 24, was postponed merely one week later—raising questions, especially given that the European defense industry has never been in such a strong position in at least four decades.
The group explained that this decision was made at the request of its two major shareholders: the French government and the German Boden-Wegmann family. Both currently hold 50% stakes in the company and will continue monitoring capital market developments. They will restart the IPO process when market conditions become more favorable.
Under the original plan, KNDS intended to list on both the Frankfurt and Paris stock exchanges. The French government and the German Boden-Wegmann family were each expected to sell 10% of their shares. Subsequently, the Boden-Wegmann family planned to divest an additional 40% of its stake, which would be acquired by the German government, while the remaining shares would be offered to institutional investors, completing the company’s equity restructuring.
KNDS was formed through the merger of Germany’s Krauss-Maffei Wegmann and France’s Nexter, and is the manufacturer of the Leopard 2 main battle tank and the Caesar self-propelled howitzer. The company achieved revenue of €4.4 billion in 2025, with backlog orders amounting to €33.1 billion by year-end.
Market expectations had positioned this as one of the largest defense company IPOs in Europe in recent years. Reuters previously cited sources estimating the company’s IPO valuation at around €15 billion. However, multiple media reports indicate that institutional investors have offered significantly lower valuations. According to insiders close to the deal, some investors valued the company at approximately €10 billion, while the Boden-Wegmann family reportedly hoped for a valuation closer to €14 billion. The Financial Times earlier reported that stakeholders would not proceed with the IPO if the valuation fell below €12.4 to €12.5 billion.
Officially, shifting market conditions were cited as a key reason for the delay. On June 25, shares of German defense firm Rheinmetall plunged over 20% in a single day after the German government canceled a naval contract the previous day. Although KNDS does not engage in naval equipment, several bankers involved in the IPO project noted that institutional investors typically use Rheinmetall as the primary benchmark for valuing KNDS. Thus, Rheinmetall’s sharp decline also dragged down market expectations for KNDS.
Meanwhile, CSG, a Czech defense group that went public earlier this year in Amsterdam, now trades below its issue price. Analysts suggest that while European defense companies still benefit from ongoing military expansion plans by European nations, some investors have recently begun reallocating capital toward fields such as artificial intelligence and electrification. Additionally, some European defense firms have failed to expand production capacity at the pace previously promised, undermining investor confidence.
The German government subsequently stated that it respects KNDS’s decision to delay the IPO and will continue working with its French partner to support the company’s long-term development.
KNDS emphasized that this postponement will not affect its operations or financial health, as IPO proceeds were originally destined for the French government and the German Boden-Wegmann family—not for the company’s own account. The company reiterated that its current focus remains on steadily enhancing production capabilities. Furthermore, if the IPO is completed in the future, it could help facilitate long-term acquisitions across Europe through share exchange mechanisms.
However, some analysts argue there are underlying governance tensions between France and Germany. Is Germany willing to accept a strict equal-shareholding structure with France? Moreover, since one of the reasons driving the KNDS IPO was the expansion of projects like the new Leopard 2A8 tank and the Boxer infantry carrier, experts speculate that the German federal government and Bundeswehr may be reevaluating their budget priorities—shifting focus toward drones and loitering munitions, while reducing investment in traditional combat vehicles, as these systems have shown limitations in the battlefield context of Ukraine.
Source: rfi
Original article: toutiao.com/article/1869598639234052/
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