Warship Builder TKMS Rides Defense Boom to Blowout Stock Market Debut

FRANKFURT, Oct 20 (Reuters) – Warship builder TKMS rode a global defense boom to reach a valuation of 5.15 billion euros ($6 billion) in its blockbuster stock market debut on Monday, around twice what analysts had expected.

The listing of TKMS is the German conglomerate Thyssenkrupp’s latest move to simplify its structure and take advantage of growing demand for defense assets.

Shares in Thyssenkrupp, which will keep a 51% stake in TKMS after the spin-off, closed around a fifth lower, reflecting the transfer of the stake in the naval vessel business, and up 7.3% once the parent’s valuation is adjusted for the transaction.

Headquartered in the northern German port city of Kiel on the Baltic Sea, TKMS, which traces its roots back 187 years, is the world’s largest builder of non-nuclear submarines and frigates. Its Atlas Electronics division also produces underwater technology, including mine-sweeping systems.

DEFENCE SPENDING BOUNCING BACK AFTER POST-COLD WAR LULL

TKMS shares settled at 81.1 euros apiece, after rising to as much as 107 euros. Analysts had expected the spin-off could value the company at 2.3 billion euros to 2.7 billion euros.

“The full order books and the excellent market position resulted in a high level of investor confidence regarding future growth and profitability,” said Christof Muerb, managing director at Deutsche Bank, one of the spin-off’s financial advisers.

Overall, Thyssenkrupp shareholders, who received one TKMS share for every 20 shares they own in the parent, saw the value of their investments jump by 14% compared with Thyssenkrupp’s closing price on Friday.

Demand for defense equipment has soared as a result of Russia’s full-scale invasion of Ukraine in 2022 and subsequent U.S. pressure on Europe to bolster its military capacity.

TKMS’s order book backlog has more than tripled in the past five years, reaching 18.6 billion euros in June 2025.

MOVE GIVES TKMS ACCESS TO FINANCIAL MARKETS

“We need more flexibility … in light of rising geopolitical tensions,” TKMS CEO Oliver Burkhard said just before shares began trading.

Burkhard said he would head to Canada later on Monday alongside Defence Minister Boris Pistorius, hoping to secure a major submarine order it has recently been short-listed for.

The company is also lined up to participate in the German navy’s F127 frigate program and negotiating a submarine contract with the Indian government.

“With defense budgets in core markets expected to more than double, TKMS is well positioned for growth,” said a note by mwb research. The group’s mid-term growth target looked understated, mwb said, given NATO and European Union procurement budgets were projected to grow by more than 170% by 2030.

The listing allows TKMS to finance acquisitions in the consolidation of Europe’s defense industry and gives it “additional degrees of freedom,” said Miguel Lopez, CEO of parent Thyssenkrupp.

In a reflection of soaring investor appetite for pure plays in the defense sector, the spin-off also coincides with deliberations by Franco-German defense supplier KNDS over an initial public offering in the coming months.

TKMS, which employs more than 9,100 staff globally, last month held its first capital markets day, presenting margin targets that some investors said were not ambitious enough when compared with rivals, such as Britain’s BAE, Germany’s NVL and France’s Naval Group.

The business that would later become TKMS began making steam engines and railroad cars in the early 1800s and later built Germany’s first submarine, the so-called Brandtaucher, as the country sought to better compete with Denmark’s navy.

Apart from Deutsche Bank, Citi and Commerzbank also acted as financial advisers on Monday’s listing.

Speaking at the debut in Frankfurt, Lopez told Reuters Thyssenkrupp was in intensive discussions with India’s Jindal Steel International over the sale of the group’s steel division.

“We’ll see what outcome we’ll have over the next few months,” he said.

($1 = 0.8575 euros)

Defense rally https://reut.rs/4nswzW0

(Reporting by Christoph Steitz, Paolo Laudani, Ludwig Burger and Alexander Huebner; Writing by Christoph Steitz and Matthias Williams; Editing by Emelia Sithole-Matarise, Thomas Derpinghaus, Joe Bavier and Tomasz Janowski)

(c) Copyright Thomson Reuters 2025.

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