Franco-German defence group KNDS is reported to be in negotiations with Mercedes-Benz over acquiring the carmaker’s Ludwigsfelde factory south of Berlin. The talks, reported by Spiegel and cited by Reuters, focus on using the site to expand KNDS’s industrial footprint for the growing European defence market.

The plan under discussion would initially involve KNDS leasing part of the plant before a possible full takeover. During any transition, the facility could produce KNDS military vehicles while Mercedes continues producing vans. The report also says the deal could affect around 2,000 employees.

KNDS is also said to be looking at other German manufacturing capacity, including a potential move involving Volkswagen’s Osnabrück plant, as Volkswagen considers options for the site after current production ends in 2027.

KNDS confirmed it is in talks with potential partner companies and said it is seeking suitable locations to support a ramp-up in defence production, while Mercedes and Volkswagen did not provide immediate detailed comments on the reports.