Knds postpones the long-awaited stock market debut due to market conditions.
The Franco-German producer of the Leopard tank and Caesar howitzer explained that the listing process will resume when capital market conditions are deemed more favorable.
The decision concerns what would have been one of the most important European IPOs in recent years in the defense sector. The announcement of the imminent IPO had arrived just days after the agreement between France and Germany on the group’s governance. It was indeed expected that at the end of the listing, 80% of the capital would be equally divided between France and Germany. For the following ten years, neither shareholder will be able to fall below a 30% stake without the other’s consent.
Following the postponement of the listing, the German government stated in a written response that it respects the company’s decision and remains committed to collaborating with French partners to ensure the group’s long-term future, reports today Reuters.
The heavy military equipment manufacturer is one of the most strategically important defense companies in Europe, playing a key role in the development of the Franco-German project for the future Main Ground Combat System (MGCS) tank, intended to replace the German Leopards and French Leclercs, highlights Bloomberg.
But the IPO is only postponed: the group and its shareholders – half German families and half French State – indicate they are ready to resume the listing process as soon as market conditions allow, emphasizes Les Echos.
All the details.
POSTPONEMENT OF THE LISTING FOR KNDS
In a statement released on July 1, Knds informed that it had decided to postpone the stock market listing.
“Given the current volatility in the European defense sector market, Knds announces that its shareholders have informed the company of their intention to postpone the IPO until more favorable market conditions return,” the company explains.
The group added that “Knds and its shareholders will continue to closely monitor capital market conditions and are ready to resume the IPO process as soon as market conditions allow.”
THE PLAN FOR A DUAL LISTING BETWEEN PARIS AND FRANKFURT
Just last week Knds had announced its intention to proceed with an initial public offering and to request admission to listing and trading of its ordinary shares on the Paris and Frankfurt stock exchanges. The IPO was to consist of the sale of a stake of up to about 20% of the existing share capital by the current shareholders, GIAT Industries, a holding controlled by the French State, and Wegmann & Co GmbH, a private German holding.
According to Bloomberg, the operation could value Knds between 15 and 18 billion euros.
VALUATIONS AND MARKET UNCERTAINTIES
According to what the Financial Times reported, one of the main issues concerned the company’s valuation. Investor sentiment towards the planned initial public offering of Knds “has deteriorated in recent days,” reveals the British financial daily, adding that the company was “struggling to convince investors to support the IPO with a valuation above 12 billion euros.”
WHAT IS HAPPENING TO DEFENSE STOCKS
The postponement of the operation comes at a time of cooling investor interest in the defense sector, after the strong rise recorded in recent months following expectations of increased military spending by NATO countries, highlights Reuters.
In recent days, the stock of the German defense giant Rheinmetall has also declined, while shares of the Czech group CSG, listed on the Amsterdam Stock Exchange since the beginning of the year, are trading below the placement price.
Before the decision to suspend the operation, a source close to the dossier had recalled the precedent of the German company Renk, which in 2023 postponed its IPO only to resume it four months later, once investor sentiment towards the sector improved, Reuters also recalls.
THE GERMAN STATE PARTICIPATION IN KNDS
Finally, as already mentioned, the postponed IPO would have paved the way for a complex restructuring of the shareholding of one of the main European players in the defense sector.
The listing plan is accompanied by the agreement for the entry of the German State into the capital through KfW. At the beginning of last week, the families controlling 50% of Knds capital agreed to sell a 40% stake to the German federal government.
Currently, Knds is controlled 50% by the French state and 50% by the KMW owning family, who will jointly sell about 20%. In this way, Paris will reduce the French stake to 40%, while Berlin has reached an agreement to purchase the remaining 40% from the families through the state credit institution KfW.
The operation will meet the goal pursued by the government led by Friedrich Merz to align its presence in the group’s capital with the participation held by the French State.
On June 26, the budget committee of the German Parliament had approved the acquisition by the State of a 40% stake in the Franco-German tank manufacturer Knds, as Defense Minister Boris Pistorius declared on Friday.
According to the FT, a factor that could favor a future reopening of the Knds listing process is the finalization of the expected major order from the German government for the Boxer armored vehicle, jointly developed by the Franco-German group and Rheinmetall. The contract is set to represent a significant share of the order portfolio of both companies, concludes the British financial daily.
