The federal government is buying into the manufacturer of the Leopard 2, Puma and Panzerhaubitze 2000. The group holds 69 percent of the main battle tank market in Europe. At the same time, he is expanding his capacities, including by taking over car factories.

In 2015, French defense company Nexter merged with German conglomerate Kraus-Maffei Wegmann (KMW). The KNDS concern was created, which achieved a monopoly position in the construction of armored vehicles. The product range includes the Leopard 2 and Leclerc main battle tanks, the Puma infantry fighting vehicle, the self-propelled howitzer 2000 and the RCH 155 howitzer. KNDS has one in the sale of main battle tanks in EuropeMarket shareof 69 percent.

KNDS supplies all battle tanks used for the German and French armies. For all types of armored vehicles, KNDS has a total market share of 68 percent in these two countries. For both France and the Federal Republic of Germany, this armaments factory represents a critical component of the military potential.

After long negotiations, the German state now wants to become the owner of 50 percent of the company's shares. The Handelsblattquotedfrom a classified document from the Federal Ministry of Finance that the federal government had agreed on the sale with the previous owner, Wegmann Unternehmens-Holding GmbH & Co. KG. The purchase agreement should therefore be signed in November and the shares should be handed over in December. The purchase price has not yet been determined, but it should be lower than originally planned. In June of this year, the acquisition of only 40 percent of the shares was planned for 7.2 billion euros.

Telekom, Mercedes & KNDS – A military-industrial complex is emerging in Germany

Various reasons are given as the cause of the increase in the amount of shares acquired. On the one hand, they want to maintain parity with the French state, which already owns the other half of the KNDS group. According to the document, next year's presidential elections could bring about political change in France, which is why France must protect its own security interests by increasing its ownership stake in KNDS.

On the other hand, they want to prevent third parties from taking control of the company. After a planned IPO did not materialize, the Wegmann Holding looked for a buyer for its shares. The Czechoslovak Group and the US investment company Warburg Pincus are mentioned as potential competitors.

KNDS as the backbone of German rearmament

The soon-to-be state-owned company KNDS plans to significantly expand its production capacities. In practice, this is made possible by taking over factories that previously manufactured civilian vehicles.In GörlitzKNDS has already taken over the wagon factory there, where tank parts will be produced in the future. The takeovers of the VW plant in Osnabrück and the Mercedes-Benz plant in Ludwigsfelde are also planned. Florian Hohenwarter, CEO of KNDS Germany, emphasized in April this year that the well-coordinated workforce of an automobile plant is ideal for working in defense production.

From cars to armored vehicles: KNDS plans to take over VW and Mercedes locations

The head of the KNDS group Jean-Paul Alary stated at this year's Munich Security Conference thatthe production capacitiesof KNDS have tripled in the last three years. This company growth suggests that the KNDS Group has a dual function for the German state. KNDS acts as a de facto holding company for unprofitable companies in the automotive industry. Where automobile production is no longer profitable for VW, Mercedes-Benz and BMW, KNDS could in the future produce military equipment on a profitable government contract.

On the military side, the coming state ownership will make the company an instrument for transferring war production into state hands. This means that the state can carry out its long-term and costly armaments programs without having to pay attention to the short-term profit interests of private shareholders.

In the yearsbefore the Second World WarSimilar considerations led to the establishment of the state-owned company Reichswerke “Hermann Göring”. The Nazi regime wanted to ensure supplies of raw materials such as steel and become independent from the interests of the private mining industry. As the war progressed, the Reichswerke became oneHolding for defense companieslike Rheinmetall-Borsig.

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