The German government is reportedly ready to invest €6.6 billion to acquire a stake in the Franco-German defense conglomerate KNDS. This figure, reported by “Der Spiegel” based on sources within parliament, was mutually agreed upon last week by the government and the Bode and Braunbehrens families, who were previously holding the 50% stake through Wegman-Holding. The official purchase agreement is scheduled to be finalized in November.
The acquisition comes after the ownership families decided against their initial plan to take the company public. They put the IPO on hold during the summer when defense stock values declined considerably. Subsequently, Wegmann was considering a private placement of its shares with other international investors, such as the Czech CSG Group, according to a confidential briefing from the Federal Ministry of Finance presented to parliament.
The German government intervened, arguing that allowing private investors to buy the shares posed a significant risk to German security interests, particularly concerning the critical technology used in protected and armored vehicles.
The purchase price is derived from the total valuation of the KNDS group before the planned stock market listing, which was estimated at €11.2 billion. The €6.6 billion price point involves purchasing half of this valuation plus an additional €1 billion bonus provided to the families. This supplementary payment ensures the owners continue to benefit from a proportional share of the company’s expected annual profits.
Meanwhile, negotiations for the massive Arminius procurement program, which aims to purchase 1,800 Boxer armored vehicles in its initial phase, have been significantly delayed. The German military procurement office postponed the Arminius deal shortly before the government’s entry into KNDS, citing serious disagreements in Berlin regarding pricing and the scope of the services. New renegotiations are underway, with a potential agreement possible next year if the industry is willing to compromise.
