The deal envisages Paris and Berlin holding equal stakes in the maker of tanks and other military gear, at a time when the continent is contending with a hostile Russia and worsening US ties.Amsterdam-headquartered KNDS has a portfolio ranging from Leopard 2 and Leclerc tanks to artillery and armoured vehicles, and is a key supplier to European militaries.The announcement comes just weeks after the collapse of the Franco-German FCAS project to build a next-generation fighter jet, which dealt a severe setback to efforts to strengthen Europe-wide defence initiatives. The KNDS deal "reflects the shared determination of France and Germany to strengthen Europe's industrial and defence capabilities, to support their armed forces, and to reinforce European sovereignty in an enduring fashion," according to a joint statement issued by the French presidency.The German government also said the deal would bolster Europe's defence capabilities. "The government aims in particular to strengthen bilateral and European armaments cooperation. Cooperation with France plays a key role in this regard," it said in a statement.KNDS, created in 2015 through a merger of French and German companies, is currently half-owned by the French government via a holding company, with the rest of the shares owned by the Wegmann family of Germany.