By Pierre Tran
Paris. KNDS, a Franco-German builder of land weapons, said July 1 it has suspended its announced flotation in Paris and Frankfurt, citing “market volatility” in the arms sector on European stock markets.
The company told investors it was switching tracks just a week after launching a long-awaited initial public offering (IPO), backed by the French and German governments.
Public trading in KNDS shares had been expected to start in mid-July until KNDS shareholders tanked the flotation, for now. The company expects to go to the stock market when times and valuations improve.
“In light of current market volatility for the European Defense sector, KNDS N.V. (the ‘Company’ or ‘KNDS’) announces that its shareholders have informed the Company of their intention to resume the Initial Public Offering (‘IPO’) process upon the return of more favorable market conditions,” the company said in a statement to investors.
The KNDS reversal came in the wake of a plunge in the share price of arms builder Rheinmetall on June 25, a day after Germany cancelled a troubled F126 frigate program. Rheinmetall had been expected to take over as prime contractor on the six-ship F126 warship deal, which was running late and over budget under the management of Damen Schelde Naval Shipbuilding, a Dutch contractor.
Berlin axed the naval program to avoid a spending overrun expected to exceed €18 billion on an initial budget of some €10 billion.
While that German naval cancellation related to a different arms sector, an 18 percent fall in Rheinmetall shares led to a markdown of stock prices at other European builders of military kit, including Hensoldt and Renk. Rheinmetall shares have since partially bounced back.
That bearish sentiment was seen as leading KNDS’s German shareholders, notably Bode Wegmann, to call a halt to the flotation, preferring to wait for a more bullish outlook later, according to media reports.
“KNDS and its shareholders will continue to monitor capital markets conditions closely and stand ready to resume the IPO process as soon as market conditions allow,” the company said.
Bode Wegmann had been looking for the flotation to value the company at some €14 billion, Le Monde reported July 2, while institutional investors had set a sharply lower price of around €10 billion.
Bode Wegmann had revised its expectations, Le Monde reported. The French afternoon daily cited a June 29 report by The Financial Times that the German private shareholders had set a minimum valuation of €12.4 billion for the flotation.
There may have been an “enthusiasm effect,” reflecting the previous high valuation of Rheinmetall, a French defense analyst said. The fall in the stock of Rheinmetall and the Czech arms company CSG indicated a correction in market value following Berlin’s decision to sink the F126 frigate program.
The flotation plan called for Bode Wegmann to sell stock to the German government, taking Berlin’s holding to 40 percent of the capital. The French state would reduce its 50 percent stake, held via KNDS France, to the same 40 percent level, with the outstanding 20 percent placed on the stock market in Frankfurt and Paris.
It was a lack of market appetite for KNDS’s publicly traded stock that led Bode Wegmann to call a halt to the flotation, for now.
France would also hold a golden share through the economy ministry, to act as a safeguard for French weapons and ammunition. Germany will hold a similar golden share once the IPO deal goes through.
Hefty German Budget, Falling Stock Price
The IPO suspension showed that KNDS stock “does not sell,” a French mergers-and-acquisitions specialist said, with previous valuations having reflected Rheinmetall’s share price, based on bullish expectations for a €100 billion German military budget.
The “volatility” KNDS referred to in its suspension statement stood in contrast to earlier, higher estimates: shareholders had expected a valuation of €15 billion–€18 billion, and pricing as high as €25 billion just a few months ago, Le Monde reported.
The stock valuation was “fake,” the M&A specialist said, pointing to slowness in the execution of German defense budgets.
Detailed scrutiny by German members of parliament created “hell” for programs, the specialist said — in contrast to French and U.K. parliamentary procedure, which allows faster program approval.
The French parliament adopted a bill July 1 for the mid-term revision of the 2024–2030 military budget law, adding €36 billion to a total of €436 billion in spending through 2030. Some MPs proposed a surprise amendment to round up the increase to €50 billion, which caught the government off guard and delayed adoption of the bill.
The Macron administration secured the votes needed to adopt the €436 billion bill, in part by bringing forward an extra €1.8 billion for the 2028 defense budget. With parliamentary and presidential elections next year, the incoming head of state may propose a fresh look at military spending at the start of a new term.
A London-based market analyst said the valuation sought by KNDS shareholders was based on Rheinmetall’s high share price last year, with an expectation of coming to market at a similar level, an “unrealistic expectation,” the analyst said, pointing to the weakening share prices of Rheinmetall and CSG.
CSG stock has halved in price since coming to market in January, while Rheinmetall was trading around €1,000–€1,100 after hitting €2,000 last September.
There has been a shift in investor sentiment on European defense, driven by poor industrial execution — particularly at Rheinmetall, the analyst said. That was not market volatility, but a change in investor attitude, the analyst added.
The analyst also welcomed the scrutiny powers of the Bundestag over German military spending, which is equivalent to the combined budgets of Britain and France.
Fifteen Percent Profit Margin
KNDS said it reported 2025 sales of €4.4 billion, up 16 percent from a year earlier, with operating profit of €661 million and a 15 percent profit margin. Cash holdings stood at €980 million, with an order book of €33.1 billion.
The company forecast medium-term sales of €11 billion–€12 billion, with 2026 sales growth of some 30 percent and an operating profit margin of about 12 percent. The 2026 margin will be lower than 2025’s, due to the “scaling up” of large domestic programs and the wind-down of profitable contracts that have already been delivered.
KNDS expects a medium-term operating profit margin of 14–15 percent. The company won €13.5 billion worth of orders in 2025.
The company builds the Leopard 2 and Leclerc tanks, Caesar and RCH 155 artillery, and armored vehicles.
Investor Communication
KNDS sent out a press release July 1 announcing it had joined the United Nations Global Compact, a move to promote corporate social responsibility and sustainability. The press release on suspending the IPO, by contrast, appears to have been sent to a select few.
The five-paragraph statement on suspending the multi-billion-euro flotation is not found in the “news and media” section of the company website. It appears instead in the “investor” section, under the heading “IPO.”
The company’s statement on signing the U.N. Global Compact marked the arms company’s “commitment to ethical and sustainable growth.”
The initiative covers “human rights, labor standards, environmental responsibility and anti-corruption, across its operations and value chain,” the company said.
A KNDS spokesman declined to comment on how to find the IPO press release, and no guidance was offered. An email request for the release went unanswered.
KNDS at Eurosatory
KNDS displayed a prototype of Capint, its “intermediary capability” heavy tank, at its outdoor stand at the recent Eurosatory trade show for land and air-land weapons. The tank is a French national project intended for the French army.
The Capint main battle tank is pitched as an interim measure, as the planned Franco-German main ground combat system (MGCS) is pushed back further, beyond 2040. The MGCS is due to replace the French Leclerc and German Leopard 2 tanks.
Capint has a French uncrewed turret armed with an Ascalon 120mm cannon under development. The turret can be upgraded to an Ascalon 140mm gun. An Ascalon ADT 140 turret fired on the move in spring 2026, the company said in an information note at the stand.
KNDS is developing the system with a view to delivering the first units in the 2030s, the company said in a statement. The tank would operate with counter-UAV capability, acting as the central vehicle backed up by robotic support vehicles.
KNDS Deutschland would supply the chassis, based on the Leopard 2 A8.
Also on display at the outdoor stand were the German Leopard 2A-RC 3.0 and Leopard 2 A8 tanks. The former also has an uncrewed turret.
Capint is the latest version of a tank concept dating back to 2018, when the company unveiled the concept enhanced main battle tank (EMBT), based on the Leclerc turret and Leopard 2 chassis.
Eurosatory ran June 15 to 19.