The German government will reportedly buy a 40% stake in tank-maker KNDS when it goes public later this year, according to multiple media reports.

The ownership of KNDS, which plans to go public sometime this summer, is currently split between the French government and a German family-holding.

The German holding is looking to exit the company, currently valued at around €18 to €20 billion when it goes public, prompting Berlin to discuss a stake in the producer of their Leopard 2 tank to preserve the ownership balance between Berlin and Paris.

It would then reduce its ownership to 30% within the next two to three years provided France does the same, German government sources cited in the media reports said.

KNDS is part of the Franco-German development of the Main Ground Combat System, meant to build a next-generation battle tank. Similar to its aerial equivalent, FCAS, the joint project is struggling to make meaningful progress.

Germany is one of the countries with limited state ownership in its critical defence sector. However, the government stated in its coalition agreement that it wanted to “consider strategic investments”.

With a €500 billion defence budget for the coming years, it could look to become a more active participant in its defence sector.