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CEO Alary told by board to be ready for IPO, no decision

yet

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Company in talks with German government, CEO says

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KNDS will aim to name new chair in coming weeks, Alary

says

By Sabine Siebold

AMSTERDAM, Sept 8 (Reuters) - Franco-German defence

supplier KNDS will decide in the coming months whether to launch

an initial public offering next year, CEO Jean-Paul Alary said

on Monday, and suggested the German government might take a

stake in the company.

Speaking to reporters in Amsterdam, Alary said KNDS's board

had told him to be prepared for an IPO but that a final decision

had not yet been taken.

"As a first step, I cannot see ... a reference shareholder

that will not be a German shareholder," Alary told Reuters

following the press conference in Amsterdam.

Asked whether this meant that the German government might

take a stake in KNDS, he said: "It makes sense that there is a

first step like that."

Alary, who took over as CEO in April, confirmed KNDS had

held talks with the German government about potentially

acquiring a blocking minority among other matters.

Formed in 2015 with the merger of Germany's Krauss-Maffei

Wegmann (KMW) - famous for making Leopard tanks - and French

state-owned weapons maker Nexter, KMW's previous private owners

and the French government remain joint shareholders.

Reuters reported in February that KNDS was considering an

IPO as early as the end of this year.

European defence firms have received a boost with the surge

in military spending provoked by Russia's 2022 invasion of

Ukraine, as governments move to bolster their own security while

supplying Kyiv with weapons and ammunition.

Longer term, Alary said a listing could open the company's

capital to reference shareholders linked to other European

nations and supply KNDS with the funds to finance what he called

"bold" acquisitions.

An acquisition in Italy might be one option, he added,

despite the latest setback KNDS suffered with regard to its bid

for Iveco Defence.

"It would have been a great opportunity to make a step

forward in Italy. I do hope that is not the end of the game," he

said, underscoring it would be good for KNDS to have three major

pillars in Europe, comprising France, Germany and Italy.

When asked about potential investors in KNDS, Alary ruled

out Rheinmetall, which has pursued diversification

while KNDS, he said, is resolved to remain dedicated to

producing land systems.

Airbus and Thales were not being

considered either, he said.

KNDS, meanwhile, aims to name a new chairman in the coming

weeks, Alary said, before the potential announcement of a new

capital structure.

"I think the new chairman should be fully involved in the

finalisation of this key decision," he said.

The company could also start using its French factory

capacity to help produce components for weapons built in

Germany, Alary said.

Legal requirements have compelled KNDS to produce KMW and

Nexter legacy weapons in the countries where their intellectual

property rights are held, creating a major hurdle to the

integration of the merged company.

"We have some scenarios in mind that could make sense and

could deliver such manufacturing capacity by 2026," said Alary,

adding that the plans would require clearance by authorities.

Asked when the first joint KNDS main battle tank will be

built - a vehicle to replace the German Leopard and the French

Leclerc, which could also be the first joint product of the

Franco-German company - Alary said it could be ready sometime

between 2032 and 2035.