BERLIN/PARIS, June 22 (Reuters) – France and Germany have agreed to become equal shareholders in tank manufacturer KNDS, the two governments said on Monday, paving the way for what is expected to be one of the biggest IPOs of defense sector companies in Europe.
The deal is subject to budgetary approval by the German Parliament for the planned acquisition of a 40% stake in the company from the German family owners who currently own half of KNDS. France holds the other half.
The agreement sets out long-term commitments between shareholders, equal governance rights and oversight of security issues, ahead of KNDS’ planned dual listing in Frankfurt and Paris next month.
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“This agreement reflects the shared determination of France and Germany to strengthen Europe’s industrial and defense capabilities, support its armed forces and strengthen European sovereignty in the long term,” the governments said in a joint statement.
Germany’s budget committee is expected to formally decide on Wednesday on the planned acquisition of the stake in KNDS, according to a report from the German Defense Ministry, which said the decision was necessary to ensure the company can go public in July. The intention to take KNDS public was planned in June, the report said.
Germany’s purchase of the stake will leave KNDS with a valuation of between 15 billion and 18 billion euros ($17.2 billion to $20.6 billion), a source familiar with the matter told Reuters on Sunday, in a deal that aims to create a counterweight to France.
Germany is also seeking to obtain a so-called “golden share” in the German unit of the KNDS, according to the document, which would give it expanded influence over personnel and strategic issues at the national level and ensure a balance of power between Paris and Berlin.
The planned IPO of KNDS marks one of the largest and most prestigious defense listings on the continent and comes after a recent setback in Franco-German relations following the failure of the joint FCAS new-generation fighter project.
KNDS was created through the merger of the former Krauss-Maffei Wegmann (KMW) with the French Nexter.
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(Reporting by Holger Hansen, Florence Loeve and Elizabeth Pineau)
