Germany has agreed to acquire a 40 per cent stake in KNDS, Europe's largest tank manufacturer, in a move that clears the path for the company's long-awaited public offering. The German government will purchase its holding from family shareholders who control half the company, while France reduces its 50 per cent stake to match Germany's 40 per cent holding. The remaining 20 per cent will float on markets.

Chancellor Friedrich Merz's spokesperson said the acquisition safeguards German interests amid the war in Ukraine and ongoing Russian threats to Europe. Germany plans to spend over €750bn on military modernization by 2030, making control of the Leopard 2 tank maker strategically vital. The deal follows months of difficult negotiations between Berlin and the founding families over pricing and voting rights.

KNDS previously targeted a market valuation between €15bn and €20bn, but declining defence stocks have pressured estimates toward €12bn. The company aims to file IPO documentation within days for trading before mid-July. This agreement resolves years of stalled Franco-German defence projects that strained bilateral relations.

KNDS chief executive Jean-Paul Alary called the deal a recognition of the company's strategic importance for European defence capability. German economy minister Katherina Reiche said it secures key technologies and industrial jobs. The arrangement gives both nations equal governance rights while preserving management autonomy, marking a significant shift toward coordinated European arms production.