The anticipated entry of the German state into the operations of Panzer manufacturer KNDS may be facing renewed obstacles, according to reports from the “Handelsblatt”, citing various industry and government sources. A governmental representative indicated the real possibility that the ownership families may ultimately refuse to sell to the state. This hesitation is rooted in concerns that the proceeds from the proposed Initial Public Offering (IPO) in July could fall short of expectations by several billion euros. Consequently, the two family owners might delay selling their stakes to the Federal government.
At the beginning of the year, banks mandated to handle the IPO valued KNDS between 20 and 25 billion euros. However, government and industry circles now suggest the company’s valuation is closer to just under 15 billion euros. This steep reduction is attributed to the challenging market conditions, specifically noting that defense stocks have significantly decreased in value since the start of the year. Furthermore, industry insiders report that management and the owning families are reportedly resisting the demands for voting rights being placed on them by the Federal government.
The German federal government aims to take a 40 percent stake in KNDS to secure influence comparable to that held by the French state; the company had previously preferred the government take 30 percent. This preference is also cited in industrial circles as a factor contributing to the lower valuation. Moreover, a senior defense manager outside the company complained that investors would only be willing to accept “a discount” for the remaining 20 percent of shares combined with the extensive veto powers the state seeks. This perspective, however, has been officially dismissed by the Federal government.
