"We have decided to sell our entire stake in Rheinmetall, comprising around 13.27 million ordinary shares and 1.89 million preference shares representing a total 42.09 percent of Rheinmetall's share capital," Roechling said in a statement.

Rheinmetall's share capital comprises 18 million voting common shares and 18 million non-voting preference shares, giving Roechling a majority 73.7-percent stake in the voting capital and 10.48 percent in the preference share capital.

Roechling said it would offer its shares to institutional investors in a private placement via an accelerated bookbuilt offering "which may be completed at any time within the next three days," Roechling said.

The Roechling family "has decided to provide Rheinmetall with a strong and much broader shareholder base that will give the company greater flexibility in achieving its strategy," the statement explained.

"In future, the Roechling family will focus on the expansion of its core plastics technology business via Gebrueder Roechling KG."

Speculation about imminent changes in Rheinmetall's share capital have been rife for some time and are being watched with close interest because the company specialises in defence technology.

The German government this year approved a new law that gave it the right to veto the acquisition by foreign investors of stakes of more than 25 percent in any companies active in the sensitive area of defence.

Press reports have suggested that US investors, such as Carlyle or General Dynamics, were interested in buying Rheinmetall, which makes tanks.