Germany’s government plans to purchase a 40% stake in the defense contractor KNDS. This company produces Leopard and Leclerc tanks. The move aims to bolster European defense production alongside France, its NATO ally, according to the announcement on Monday.

France already owns a 50% stake in KNDS, which resulted from the 2015 merger of Germany’s Krauss-Maffei Wegmann and France’s Nexter. The remaining shares belong to the German family behind Krauss-Maffei Wegmann.

KNDS, headquartered in Amsterdam, reported earnings of 4.4 billion euros (5 billion dollars) last year and employs over 11,000 people.

European nations are increasing their defense spending and production. This effort comes in response to Russia’s war in Ukraine and concerns over the unpredictability of the United States. The German government stated that its planned stake would provide long-term influence over a company deemed strategically significant for European security and defense capabilities.

The government emphasized that national industrial value creation, technological sovereignty, and the protection of key security and technological interests in Germany would also be strengthened.

A separate joint statement noted that Germany and France reached an agreement on KNDS’s strategy and governance. The governments aim to become joint shareholders through transactions that align both countries at equal participation levels. The statement did not specify timelines for this transition or final share levels but suggested this agreement opens the possibility for KNDS’s future public listing.

The two governments expressed their shared commitment to enhance Europe’s industrial and defense capabilities, support their military forces, and strengthen European sovereignty over the long term.

In addition to tanks, KNDS products include Puma infantry fighting vehicles, Boxer armored personnel carriers, and Dingo vehicles.