Germany seeks 40% stake in tank maker KNDS to secure defense influence

Germany is seeking to acquire a 40% stake in Franco-German defense group KNDS, the German government said Monday, in a move aimed at securing long-term influence over a company it described as strategically important for Europe’s security and defense capabilities.

Government spokesperson Stefan Kornelius said the security and defense industry had gained central importance due to the ongoing Russian threat to Europe and the war in Ukraine, making it necessary to expand defense industry's capacity.

The German government said in a statement that it particularly wants to strengthen bilateral and European arms cooperation, with cooperation with France playing a key role.

“With this stake, the federal government intends to take account of the federal government’s interests in view of the importance of the company,” the statement said.

It said Germany’s participation in KNDS would secure long-term influence over a strategically important company for European security and defense capability, while also strengthening national industrial value creation, technological sovereignty, security interests, and key technologies in the country.

The agreement and the full transaction remain subject to approval by the Budget Committee of the German Bundestag.

The government said it intends to reduce the size of its stake at a later stage while maintaining the same governance rights in the company as France.

In a joint press release, France and Germany said they had reached an agreement on KNDS’ strategy and governance, with both governments intending to become joint shareholders through transactions aimed at equal shareholding levels.

The two countries said the framework represents a decisive step toward strengthening their common sovereignty in land defense.

The agreement is based on long-term shareholder commitment, parity in governance rights, and appropriate oversight of security matters, while also paving the way for a possible initial public offering of KNDS in the near future.

KNDS was formed in 2015 through the merger of Germany’s Krauss-Maffei Wegmann, or KMW, and France’s Nexter Systems.

The company is among Europe’s leading manufacturers of land systems and produces Leopard 2 battle tanks, artillery systems, infantry fighting vehicles, and ammunition.

With more than 11,000 employees, KNDS is one of Europe’s strategically important defense companies and is also a relevant supplier for Germany’s armed forces, the government said.

France and Germany said their shared ambition is to develop KNDS into a leading European and global defense company serving both countries’ armed forces, while expanding capacity, strengthening supply chains, and reinforcing European sovereignty in defense.