KNDS owners explore IPO or stake sale amid defense sector interest
The family members behind Krauss-Maffei Wegmann, which merged with France's Nexter to create KNDS, have reportedly notified the German government about their plans to sell part of their 50% stake. They are considering options including an initial public offering (IPO) and partial divestment. Berlin is in early stages of examining the purchase of a blocking minority of 25.1%.
Several private equity firms, Middle Eastern wealth funds, German asset managers and family offices have shown early interest in acquiring a stake in the Franco-German land defense group. Investment firms including Advent, CVC Capital Partners Plc, KKR & Co (NYSE:KKR). and Warburg Pincus have begun preliminary discussions about a potential investment.
An IPO remains the preferred option for KNDS owners to partially cash out their stake. They have been discussing with potential advisers about a listing that could happen next year, potentially valuing the defense company at €20 billion ($23 billion) or more.
If they pursue a listing, the German family shareholders and the French government, which controls the other 50%, might each sell slightly more than 10% of their stakes.
At the same time, the German families, including the Bode and Braunbehrens clans, are receiving interest from financial investors as they seek to reduce their stake further. The family shareholders might also consider interest from large industry peers like Rheinmetall (ETR:RHMG) AG. Any new shareholders would likely need approval from the German government.
If an IPO or stake sale doesn't materialize, the German family owners might even consider breaking up the company to facilitate an eventual exit. This would undo the 2015 merger of Krauss-Maffei Wegmann and Nexter. This option is currently viewed only as a backup plan but might be favored by some German lawmakers and labor unions while giving the family more flexibility to sell their stake.
The final decision is complicated by the German-French ownership structure, with both sides able to block strategic changes, and differences among some individual family members.
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