German families owning half of tankmaker KNDS NV agreed to sell a 40% stake to the German government, a move that primes the company for a public listing. The sale values the stake at an undisclosed price, reflecting a strategic alignment with Germany’s defence policy.

Chancellor Friedrich Merz seeks to match the French state’s share in the firm by buying part from Wegmann & Co., the holding that controls the family owners. Industry observers note that the move could encourage further state participation in private defence firms.

Earlier this year, a rally in listed defence names pushed valuations higher, but a reversal tightened pricing floors. Analysts warn that the deal may trigger a cascade of similar transactions across European defence suppliers.

With the stake sale completed, KNDS NV’s path to an initial public offering clears a major hurdle. Investors will now gauge whether the IPO can deliver returns that match the premium paid for strategic assets.