Pistorius ponders potential affiliation with a German-French tank production company.
In the world of defense manufacturing, a significant development is unfolding as the German-French tank manufacturer, KNDS, continues to make strides in the Franco-German Main Ground Combat System (MGCS) program.
The MGCS project, which aims to produce the successor to the Leopard 2 and Leclerc tanks, has been accelerating since 2025. Key developments include the signing of the MGCS Project Company shareholder agreement in January, establishing a new company equally owned by KNDS Deutschland, KNDS France, Rheinmetall Landsysteme, and Thales. This new company, based in Cologne, will lead the development of the next-generation combat system, with deployment anticipated around 2040.
Amidst these advancements, the German government is considering acquiring a minority stake in KNDS. This potential state participation comes as the German family shareholders plan to reduce their ownership, either through a stake sale or an Initial Public Offering (IPO), driven by increasing investor interest in defense companies.
The parallel development efforts of MGCS and the MARTE tank development program could create some strategic and financial uncertainties. However, they also demonstrate ongoing innovation in European tank systems, involving KNDS and Rheinmetall.
As the MGCS project gathers momentum, German-French government consultations are scheduled for late August. Defense Minister Boris Pistorius and his French counterpart, Sébastien Lecornu, have already had a preliminary meeting at Rheinmetall's Unterlüß plant.
The discussions between the ministers covered various topics, including the German-French cooperation on the Elsa project for the development of long-range weapons, where Germany is to play a leading role in implementation. Pistorius expressed his support for "close German-French cooperation" and emphasized its importance for strengthening European defense capabilities.
In the planned IPO of KNDS later this year, the French state and the Wegmann Holding of the two families could each sell 12.5% of the shares to new investors. The Bode and Braunbehrens families, who own shares in the Leopard tank manufacturer, are also reportedly planning to sell their shares.
The potential state stake in KNDS and the IPO plans seem part of a broader strategic move to integrate defense industry investments with public oversight and market financing. The German government is preparing for an entry with a blocking minority to maintain the balance of power between Germany and France.
Despite the uncertainties and differences in the joint combat aircraft project FCAS of Germany, France, and Spain, both ministers agreed on the need for close German-French cooperation. However, France's alleged claim of an 80% work share in the FCAS project has caused irritation on the German side.
The situation in Ukraine was another point of discussion during the meeting between Pistorius and Lecornu. As the MGCS project progresses, it remains to be seen how these developments will shape the future of European defense capabilities and the role of KNDS within it.
- The potential state participation in KNDS, driven by increased investor interest in defense companies and a possible stake sale or Initial Public Offering (IPO), is part of a broader strategic move to integrate defense industry investments with public oversight and market financing.
- In addition to their cooperation on projects like the Elsa project and the MGCS program, ongoing efforts in the parallel MARTE tank development program and the joint combat aircraft project FCAS indicate ongoing innovation in the European aerospace and defense finance industries, involving KNDS and Rheinmetall.
