The German government will buy a 40% stake in European tank maker KNDS from the families that own it, with plans to bring its stake to the same level as the French government.
This sets the stage for the long-awaited IPO (initial public offering) for KNDS on the stock exchange. Before the listing, Berlin was keen to get an equal stake as France.
The stake is expected to be worth around €6 billion ($6.8 billion), based on the company’s valuation. The plan still needs approval from the budget committee of the German Bundestag.
France currently owns 50% of KNDS. The countries said in a joint statement that they had agreed on the “strategy and governance” of the company and that they aimed to maintain the same shareholding levels in the future.
According to multiple media reports quoting people close to the talks, France will soon reduce its stake to 40% so that both governments have equal stakes. The remaining 20% is expected to be sold in an IPO on both the Frankfurt and Paris exchanges.
Berlin took action after Wegmans & Co., the families’ holding company that owns part of KNDS, decided to sell.
KNDS is Europe’s largest tank manufacturer, producing the German “Leopard 2” and French “Leclerc” battle tanks, while also working on the next generation Main Ground Combat System. It was formed in 2015 through the merger of German family-owned firm Krause-Maffei Wegmann and French government-owned arms manufacturer Nexter.
Stefan Cornelius, German government spokesman, Says the purpose of the agreement is “to protect federal interests.” And that “Germany’s participation in KNDS will secure long-term influence on a company that is strategically important for European security and defense capabilities.”
In their joint statement, the governments said: “The shared ambition of France and Germany is clear: to develop KNDS into a leading European and global defense company serving the French and German armed forces.”
Taking direct control of defense companies
The deal has raised questions as it continues a recent trend of the German government taking a direct ownership stake in a major defense company.
Marco Becht, professor of corporate governance at the Université Libre de Bruxelles (ULB), says Germany has been somewhat unusual compared to other European countries because it previously had few direct stakes in companies.
However, he believes the deal points to Berlin’s desire to benefit from potential future earnings and exert greater strategic control in an increasingly important defense sector.
“They wonder: Why do we leave all the money to private investors? And why is the state not making money from these companies by becoming a shareholder?”
Declan Power, a defense and security analyst at the Institute for International and European Affairs (IIEA), says the deal is important primarily because it reflects the strong desire of France and Germany to upgrade their defense capabilities.
“Europe talks a lot about it, but this deal is a concrete step towards Europe taking control of its own defense manufacturing capabilities,” he told DW.
He also believes it is important that European governments exercise more direct control over defense companies. He said, “The essence of the responsibility of any state, especially a democratic state, is the security of its territory and its people.”
In its statement, the German government highlighted the importance of defense in Europe in the wake of Russia’s full-scale invasion of Ukraine in 2022. “This geopolitical situation requires the expansion of defense industry capabilities.”
Becht says it also means pressure for more control. While the government already exerts considerable influence over the sector through the War Arms Control Act, which covers the licensing of weapons production and sales, this does not necessarily extend to direct corporate influence.
This KNDS deal is one of the few deals that suggests that may be changing. When submarine maker ThyssenKrupp Marine Systems (TKMS) went public in October 2025, the German government secured special advisory rights and supervisory board nomination rights as part of the IPO.
In 2021, German state-owned KfW Bank purchased a 25.1% stake in military radar company Hensoldt. It also holds about 11% shares in aerospace and defense giant Airbus.
“If you look at these cases, it seems like the German state is taking more interest in the defense sector and wants to be more involved,” says Becht.
Franco-German question
KNDS The deal is important not only because of Germany’s individual defense ambitions, but also for bilateral Franco-German defense relations.
The agreement comes in the wake of the collapse of the FCAS fighter jet project, a long-planned Franco-German defense collaboration that ultimately fell apart due to disagreements between the German wing of Airbus and France’s Dassault over control of the project.
The end of that deal pointed to some turbulence in Franco-German relations, which are vital to Europe’s collective defense sovereignty. Negotiations for the KNDS deal also dragged on for several months, indicating difficult negotiations.
In its statement, Germany highlighted the importance of working closely with France and said the agreement aims to “particularly strengthen bilateral and European defense cooperation, in which cooperation with France will play an important role.”
It also stressed that it would “work in close dialogue and on an equal footing with its French partners.”
German assertiveness?
Declan Power says that when it comes to defence, his view is that France has a tendency to try to control relations with Germany. “I think their natural reaction is to always try to maintain a dominant position,” he says.
However, he believes that the Franco-German defense relationship will only flourish if it is rooted in meaningful industrial cooperation such as this deal. “When you bring industry into it and you have German and French industry collaborating in the coal sector, I think that will improve the system,” he said.
But ULB professor Marco Becht argues that from Germany’s perspective, the deal is as much about cooperation as it is about demonstrating its growing defense power and strength to France.
He said, “It reflects the desire of a new German to be more assertive and to do less favors.” “Germany is increasingly willing to say ‘no’ rather than agree on something to accommodate France.”
Edited by: Andreas Becker