The German government has struck a deal with the family owners of KNDS to buy a 50 percent stake in the Franco-German tank maker, according to a government document seen by Reuters, as Berlin moves to strengthen its control over critical defence technology.

The purchase price was not disclosed but will be based on "the equity value for KNDS determined in the current valuation environment", the document says. Germany is likely to pay less for the 50 percent stake than the up to €7.2 billion earmarked in June for a planned 40 percent holding. Handelsblatt, which first reported the deal, said the families aim to sign a purchase agreement this month, with the transaction completed in December.

France already owns the other 50 percent of KNDS, so the deal would leave the company wholly owned by the two governments for now. Berlin wants to be on an equal footing with France and avoid being outvoted on key decisions, according to a finance ministry document prepared for parliament's budget committee. Germany would later reduce its stake alongside France until both hold 40 percent, possibly through a stock market listing if conditions allow.

From IPO plan to state ownership

The deal replaces an earlier plan to float part of KNDS on the stock market, under which both sides would have sold 10 percent each. The listing was delayed and then put on hold as defence company valuations weakened and the family owners proved reluctant to sell.

KNDS was formed in 2015 from the merger of France's state-owned Nexter, which builds the Leclerc tank, and Germany's Krauss-Maffei Wegmann, maker of the Leopard 2. An economy ministry spokeswoman told AFP the deal is intended to prevent a third party gaining dominant influence over KNDS Deutschland and the possible loss of key technologies.