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Germany and France clash over KNDS IPO as Berlin delays stake decision

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German-French tank manufacturer KNDS’s planned initial public offering has triggered a new dispute between Berlin and Paris.

KNDS, formed more than a decade ago through the merger of German arms manufacturer Krauss-Maffei Wegmann (KMW) and French company Nexter, is due to go public no later than July.

According to German Foreign Policy, Paris is pressing for the IPO to proceed because it wants to avoid any disruption linked to the presidential election campaign expected to begin in the autumn.

The German government, however, remains divided over whether it should seek a 40% stake in KNDS, matching the French state’s planned holding, or settle for 30%.

Berlin’s failure to act threatens to derail the entire flotation, prompting KNDS to consider moving forward without German state participation.

Under that scenario, defense companies from other countries could acquire shares. France is reportedly considering the participation of Italy’s Leonardo group, while Prague-based ammunition manufacturer Czechoslovak Group (CSG) has also expressed interest in joining the project.

At the same time, corruption allegations threaten to seriously disrupt the IPO process.

A brief history of German-French tank manufacturer KNDS

KNDS was established in 2015 through the merger of Germany’s tank manufacturer Krauss-Maffei Wegmann and France’s Nexter.

KMW is known for products including the Leopard 2 main battle tank and the Boxer armored vehicle, while Nexter manufactures the Leclerc main battle tank and the Caesar howitzer.

Like the Franco-German Airbus Group, the joint venture is officially headquartered in the Netherlands.

Until now, the French government on one side and Wegmann Holding on the other have each held 50% stakes.

Within Wegmann Holding, the Bode and Braunbehrens families, which maintain tight control over KMW, have combined their interests.

A KNDS stock market listing has been under discussion for a considerable period, with Wegmann Holding prepared to sell all of its shares.

In that context, the German government in particular has attached great importance to ensuring that Germany and France retain as equal an influence as possible even after the IPO.

So far, KMW and Nexter have continued producing their traditional products at their respective national facilities, with KMW accounting for the larger share at 70%.

Berlin fears losing control over that balance. It is argued that France could otherwise gain excessive access to the Leopard 2 and its underlying technology.

Uncertainty over Germany’s future stake

Regarding the IPO, Paris plans to sell 10% of its shares in KNDS while retaining 40% under state ownership.

Berlin, by contrast, has yet to decide on its own stake, despite the flotation originally being scheduled for next month and despite the German owners, the French government and KNDS insisting on maintaining that timeline.

According to reports, Defense Minister Boris Pistorius supports a 40% stake in order to preserve full parity with France.

Economy Minister Katherina Reiche and the Chancellery, however, favor a 30% stake to reduce costs, arguing that under Dutch law such a holding would be sufficient to secure the desired control rights.

Thomas Enders, the new chairman of KNDS’s supervisory board, is advocating for a stake of just 25.1%. The former Airbus CEO has noted that the German and French governments each hold less than 11% in Airbus.

As a result, if Paris could be persuaded to reduce its KNDS stake, additional private capital could be mobilized. During his tenure at Airbus, Enders succeeded in aligning the governments’ shareholdings.

France’s patience is wearing thin

The German government’s inability to reach an agreement on its KNDS stake now threatens to throw the entire IPO timetable off course.

According to an internal document recently cited by Handelsblatt, reaching an internal agreement by the summer is considered an “extremely ambitious” goal.

However, postponing the IPO until autumn is being rejected by both the French government and the German shareholder families.

On the one hand, they fear that KNDS’s market valuation — currently estimated at €20 billion — could decline over the course of the year, as happened with Rheinmetall, thereby reducing the value of the shares being sold. On the other hand, Paris wants to conclude the deal before the presidential election campaign scheduled to begin after the summer break.

Chairman Enders had already increased pressure in April. KNDS says the German government has been aware of the company’s IPO plans since the beginning of 2025 and has therefore had sufficient time to make a decision.

On Friday, KNDS CEO Jean-Paul Alary intensified that pressure further in a statement saying the company remained committed to its original timetable “in light of media speculation regarding a possible postponement of the IPO.”

The situation threatens to leave the German government sidelined.

Czechs and Italians also show interest

Reports that other defense companies are interested in acquiring KNDS shares have further complicated the situation.

France is reportedly considering encouraging Italian defense company Leonardo to invest. That could result in a French-Italian majority within KNDS.

Meanwhile, the Financial Times reported that Prague-based Czechoslovak Group, which is little known in Western Europe, is also considering purchasing shares. CSG manufactures ammunition and increased its revenue by 193% from 2023 to 2024 to $3.63 billion, largely due to large-scale deliveries to Ukraine.

The company particularly benefited from the Czech ammunition initiative under which President Petr Pavel raised billions of dollars in donations to finance ammunition purchases later exported to Kyiv by companies including CSG.

In SIPRI’s 2024 ranking of the world’s largest arms companies, CSG placed 46th, directly behind KNDS in 42nd place.

The company has continued expanding through acquisitions, including US ammunition producer The Kinetic Group, and is now reportedly in talks with Wegmann Holding over a potential share purchase.

Corruption allegations

The planned IPO is unfolding under the shadow of corruption allegations tied to the 2013 sale of 62 Leopard 2 main battle tanks and 24 Panzerhaubitze 2000 self-propelled howitzers to Qatar.

The purchase price was estimated at around €1.89 billion. According to reports, KMW — long before its merger into KNDS — appointed the Qatari company Kingdom Projects as an intermediary and paid it €85 million to secure the contract.

At the time, 75% of Kingdom Projects was owned by Sheikh Ahmed bin Nasser Al Thani, deputy chief of staff of Qatar’s military intelligence service and a member of the ruling family in Doha, while the remaining 25% belonged to his son.

KNDS says it has launched an investigation into the matter in order to clarify the allegations. According to reports, auditing firm PwC considers the accusations serious enough to delay issuing its audit opinion on KNDS’s 2025 annual financial statements.

As a result, it remains uncertain whether the IPO can proceed as planned under these conditions.

Europe

Russia stays in ITER nuclear fusion project despite EU sanctions

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Despite European Union sanctions and deteriorating relations with Brussels, Russia continues to take part in ITER, the world’s largest nuclear fusion experiment.

According to a report by Euronews television, this situation represents a rare example of cooperation in the ongoing crisis between Moscow and the West.

Following the war in Ukraine, the EU decided to reduce its dependence on Russian energy resources. Accordingly, Russian state institutions were excluded from various scientific programmes, and the provision of Russian funding to European scientific bodies was prohibited.

In contrast, ITER rules do not permit the expulsion of participating states from the project.

Owing to this legal structure, Moscow retains its 9.1% share in the venture. The Russian government continues to provide specialist personnel and technological support, while Russian engineers work alongside their European counterparts at the reactor site.

More than 30 countries, including Russia, are partners in the International Thermonuclear Experimental Reactor (ITER) initiative, where construction began in southern France in 2010. In this massive project, estimated to cost approximately 19 billion euros, critical technical assignments remain entrusted to Russian specialists.

Russian scientists and engineers are responsible for manufacturing complex components, including switchgear equipment, busbar systems, energy-absorbing resistors for power supply, and protection systems for the reactor’s superconducting magnetic assembly.

To manufacture these reactor components, a new industrial facility with an annual production capacity of 30 tonnes of superconductors was established at Rosatom’s site in the city of Glazov.

Moscow’s continued participation in the project is causing unease among some EU officials. In 2025, Members of the European Parliament approached the European Commission to enquire about ways to eliminate dependence on Russia within ITER.

EU Commissioner for Energy Dan Jørgensen replied that a participating state can leave the project only of its own volition.

The European Commission had previously announced plans to ban Russian nuclear fuel and technology, though the adoption of the measure was subsequently delayed.

Certain member states continue to import Russian fuel, with Hungary, for instance, building new nuclear power plants of Rosatom design.

World Nuclear Association data show that Rosatom alone accounts for approximately 44% of global uranium enrichment capacity.

According to a Financial Times report published in January, executives from energy companies Urenco and Orano called on the EU to draft a plan for the phased cessation of enriched uranium imports from Russia.

The companies argued that continuing these supplies creates long-term dependence on Moscow.

A report published in the summer by Sprott Asset Management indicates that, despite EU efforts to diversify sources, European dependence on Russian uranium is increasing.

According to Eurostat data, EU countries purchased 172.6 million euros worth of Russian nuclear fuel during the January to April period of 2026. Imports rose from 253.2 tonnes to 280.9 tonnes compared with the same period of the previous year, when purchases stood at 31.9 million euros.

Total EU imports of Russian nuclear fuel, including uranium, plutonium, and their compounds, reached 347.9 million euros across the whole of 2025. The Netherlands and France accounted for more than 90% of these purchases.

Commenting on the developments, Urenco Chief Executive Officer Boris Schucht noted that European producers are struggling to attract investment for enrichment capacity due to uncertainty over the future of imports from Russia.

Schucht stated that making new investment decisions remains difficult because Russia possesses significant idle capacity that could return to the market.

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German Christian Democrats clash over proposed AfD party ban

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Following the state election in Saxony-Anhalt, the Christian Democratic Union and Christian Social Union (CDU/CSU) are seeking a strategy against the victorious Alternative for Germany (AfD).

Hendrik Wuest, the Minister-President of North Rhine-Westphalia whose name is mentioned for the CDU leadership, proposes examining the possibility of banning the party.

The Hessian CDU and its Bavarian sister party, the CSU, reject the idea, arguing that the outcome would be uncertain and that the process would take too long.

Wuest’s push to establish a federal and state-level working group on the constitutional handling of the AfD is met with scepticism even among influential CDU colleagues.

“I still believe that the AfD must be politically marginalised,” said Hessian Minister-President Boris Rhein.

Rhein added that, in principle, everyone should have the freedom to discuss any subject, but warned against believing that a quick solution is possible.

In this context, the CDU politician referenced his experiences with the last ban proceedings against the NPD (National Democratic Party), which lasted several years and proved inconclusive.

Speaking on the sidelines of an event at the Representation of the State of Hesse in Brussels, he noted that this should always be kept in mind.

At the time, the judges of the Federal Constitutional Court ultimately concluded that the NPD was indeed pursuing unconstitutional aims.

However, according to their assessment, the party lacked the potential to successfully achieve those aims, and they therefore rejected the ban application.

CSU leader and Bavarian Minister-President Markus Soeder had previously expressed a view similar to Rhein’s.

“I completely understand that one might prefer the AfD not to exist, but the reality is that a ban under constitutional law is practically unenforceable,” Soeder said following a cabinet meeting in Munich.

In addition to years of legal proceedings, he stated that there is also a risk of the AfD gaining “martyr” status. Soeder argued that the AfD must be confronted on the substance of its policies.

Following the AfD’s election victory in Saxony-Anhalt, Wuest had earlier called for the party to be examined by a group consisting of federal and state experts, constitutional scholars, and officials from the Federal Office for the Protection of the Constitution.

“The real question is how the state, under constitutional law, should handle a party that pursues unconstitutional aims in at least some states,” the CDU politician explained.

According to him, the inquiry should be open-ended and not automatically lead to proceedings to ban the party.

Speaking in Brussels, Rhein said that following the elections in Saxony-Anhalt, the Union’s goal must be to “bring people out from behind the firewall and build bridges to the political centre.”

This means talking to people, taking their concerns seriously, and then translating these into very concrete policies.

One of the most critical statements regarding the AfD came from former CDU Chancellor Angela Merkel.

Saying that “as a CDU member, her heart bleeds,” Merkel noted that she views the Saxony-Anhalt election results as a turning point in the history of the Federal Republic of Germany.

Merkel also took a clear stance on how her party should deal with the AfD. She implied that she is not very fond of the “firewall” (Brandmauer) policy used by the CDU and Chancellor Friedrich Merz against the AfD.

“I did not invent it, nor do I particularly like it,” the former Chancellor said, noting that they cannot convince anyone with this slogan and that “democratic parties” must stop obsessing over the AfD and instead explain their own projects.

Merkel advised political parties to adopt a different communication style. Recommending that “democratic parties” seek greater contact with the public, the CDU politician argued that the absence of a shared information pool due to “personalised feeds” on social networks makes this more difficult.

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German business urges swift reform after AfD win in Saxony-Anhalt

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Germany’s small and medium-sized enterprise sector, known as the “Mittelstand”, has urged the federal government to implement “reform” following the Alternative for Germany’s (AfD) clear victory in Saxony-Anhalt.

Representing the group that forms the backbone of Europe’s largest economy, Christoph Ahlhaus, head of the German Federal Association of the Mittelstand, told Bloomberg that an urgent change in policy is needed to restore confidence in Germany’s economic future and to curb support for “populist” parties.

In an interview on Monday, Ahlhaus stated that the AfD’s victory in Saxony-Anhalt was “a clear signal for all people in Berlin and for Chancellor Merz,” adding, “The disappointment is very, very big.”

Germany’s traditional industrial sectors, ranging from automotive to chemicals and engineering manufacturers, are under intense pressure to adapt to a rapidly shifting competitive landscape.

High energy prices, bloated bureaucracy, and fierce price competition from Chinese rivals are eroding profits and triggering sweeping restructurings, fuelling anxieties over the economic future among industrial workers.

Ahlhaus noted that the vast majority of companies do not support the AfD’s policy aimed at reducing economic integration in Europe, arguing that crackdowns on immigrants could become a “major problem” for small and medium-sized enterprises.

Martin Lück, chief capital markets strategist at Franklin Templeton, said in a note: “The extremely strong performance of the AfD is, above all, an important political signal, but not yet an acute development for the capital market.” He continued:

“From an investor’s perspective, this creates problems if doubts arise regarding the state’s European integration, fiscal reliability, openness to international skilled labour, or the continuity of its energy and industrial policies.”

Lück added: “Saxony-Anhalt, which is particularly reliant on fresh investment and skilled labour, can hardly afford such doubts.”

Speaking to Bloomberg ahead of Sunday’s elections, the AfD’s lead candidate, Ulrich Siegmund, rejected the criticism and insisted that the party’s policies would actually help attract investment.

“Many companies want to invest in Saxony-Anhalt because they view it as a competitive edge, and having an administration that provides planning certainty once again is seen as an asset for the region,” Siegmund said.

According to Siegmund, the business community wants “to eliminate ideology entirely from economic development support and, in general, grant freedom back to companies.”

Saxony-Anhalt has the lowest per-capita GDP among Germany’s 16 federal states.

Since national reunification, Saxony-Anhalt has suffered a sharper demographic decline than any other region; between 1990 and 2024, its population fell by more than a quarter.

Marcel Fratzscher, president of the Berlin-based German Institute for Economic Research (DIW), contended that the election result was “an economic disaster as well,” saying: “Whoever forms the next government will struggle to implement reforms. Yet Germany needs very tough reforms.”

Speaking to Bloomberg, the former European Central Bank official warned that the “far-right” party’s platform could lead to catastrophe:

“If you look at the consequences of what the AfD wants, there will be a massive drop in GDP and a massive rise in unemployment. Germany is very export-dependent. Almost half of Germany’s GDP comes from exports, and the AfD will ruin [its] economic model; that will have terrible, as well as economic, repercussions.”

Major cutbacks across core sectors such as the chemical and automotive industries have heightened anxiety among workers regarding their economic future.

Far-reaching reorganisations, such as Volkswagen’s restructuring programme approved late on Thursday, will generate a domino effect across various regions of Germany, including Saxony-Anhalt.

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