Berlin will buy a 40% stake in defense giant KNDS, putting it on par with Paris, as the two countries continue to militarize

Germany and France are preparing an unprecedented joint state takeover of the EU's largest tank maker, as the two countries continue their militarization drive.

The two governments announced the deal involving Amsterdam-headquartered KNDS on Monday, saying they have finalized the framework governing the company's ownership, with the countries set to have equal shares.

Germany is expected to purchase 40% of the stock, while the French government will reduce its holding from 50% to 40%, thus leaving a free-float of only around 20%.

Germany's stake would be acquired from the Wegmann family, KNDS's current German shareholder, though the contract is still awaiting the final signature and the green light from the Bundestag's parliamentary budget committee.

Neither Germany nor France has announced the value of the deal, but a Reuters source said the German stake purchase will value KNDS at €15 billion to €18 billion ($17.1 billion to $20.5 billion).

KNDS has a portfolio ranging from Leopard 2 and Leclerc tanks to artillery and armored vehicles, and is a key supplier to European militaries. Formed in 2015, the company has equipped Ukraine's military with Leopards and Caesar systems and opened a Ukrainian subsidiary to support local repair and ammunition production.

The German government said its planned stake "will secure long-term influence on a company that is strategically significant for European security and defense capability."

French President Emmanuel Macron also hailed the deal, saying that "together with Germany, we are taking a major step for our defense sovereignty today." He added that the partnership was giving the two countries "the means to defend themselves, produce and innovate on their own," in pursuit of "a sovereign Europe that protects and chooses its own destiny."

Macron has for years pushed for European strategic autonomy amid a growing rift with the US, warning the continent must not be a "vassal" of Washington. German Chancellor Friedrich Merz has been more cautious but increasingly tilted the same way, warning last year that European nations must end what he termed a defense "free-ride" on the US.

Citing an alleged "Russian threat," both countries have embarked on expedited militarization, aligning themselves with NATO's target defense spending of 3.5% of GDP by 2035. Moscow has repeatedly dismissed speculation that it could attack NATO, with President Vladimir Putin labeling the claim as "not only pure insanity but also a deliberate provocation."

While the new Franco-German deal marks a milestone in military cooperation, the KNDS announcement came just weeks after the collapse of the joint FCAS project to build a next-generation fighter jet by 2040. The venture failed due to an estimated €3.2 billion in sunk R&D costs and irreconcilable disputes between Dassault and Airbus over leadership of the program.

(RT.com)