KNDS Delays IPO as Defense Stocks Slump
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- KNDS postponed its IPO until "more favorable market conditions" return, citing "current market volatility for the European Defense sector" in a Wednesday statement.
- KNDS struggled to secure investor backing for a valuation above €12 billion ($13.7 billion), well below the up to €25 billion speculated in earlier media reports, sources familiar with the matter told CNBC.
- KNDS confirmed its plan to dual list in Paris and Frankfurt in what would have been one of Europe's largest IPOs this year, widely anticipated as a 20% flotation this summer.
- The German and French governments agreed earlier this month on joint ownership of the Leopard 2 tank and Caesar howitzer maker, a precondition for the listing.
- Rheinmetall's stock has plummeted 32% year-to-date, with smaller peers Hensoldt and Renk also in the red; BAE Systems, Leonardo, and Thales fared better but mostly underperformed the Stoxx 600.
- Czechoslovak Group (CSG) saw its value plummet roughly 60% after its shares soared 33% on their first day of trading in January — an example cited of the sector's whiplash.
- Investors are questioning whether Europe's pledged hundreds of billions of euros in rearmament and military modernization spending will translate into earnings growth quickly enough, per CNBC.
Why it matters: KNDS's withdrawal exposes a widening gap between European governments' promised rearmament spending — hundreds of billions pledged — and investor skepticism about near-term defense earnings, with the expected KNDS valuation already collapsing from up to €25 billion to a €12 billion floor before the delay.
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