Elliott Discloses Stake in Germany's Thyssenkrupp -- Update

By Donato Paolo Mancini

Activist investor Elliott Management Corp. on Thursday said it had taken a stake in German industrial giant Thyssenkrupp AG, entering another European corporate battle at a company already under pressure to break itself up.

The hedge fund was quick to signal its intention to make changes at the company. Elliott Advisors, its British arm, said "Thyssenkrupp has significant scope for operational improvement which would benefit all stakeholders."

The move adds to pressure on the management of the German conglomerate. It has already faced shareholder calls to shed its historic steel-producing operations, which have been a drag on earnings, while the units that make elevators and warships deliver far higher profit margins.

Shares in the company have slumped more than 22% during Heinrich Hiesinger's seven-year tenure as chief executive.

Swedish activist investor Cevian Capital AB is the biggest stakeholder in the company with more than 13%, according to FactSet.

Thyssenkrupp, which traces its roots to the early 19th century and has long been a symbol of Germany's industrial power, didn't immediately respond to a request for comment.

Thyssenkrupp is only the latest investment Paul Singer's Elliott Management has made in Europe. The company has taken a stake of more than 3% stake in pay-TV giant Sky PLC, anticipating a possible bidding war between 21st Century Fox Inc. and Comcast Corp.

Earlier this year, it launched a proxy fight at Telecom Italia SpA to simplifying corporate governance. In early May, it took two-thirds of the company's board seats last month, leaving majority shareholder Vivendi SA with just five of 15 seats.

Last year, Elliott pushed Dutch paint maker Akzo Nobel NV to enter deal talks with U.S. rival PPG Industries Inc. Elliott and Akzo eventually reached a truce in which the paint maker agreed to separate its specialty-chemicals business. The company also added two board members backed by Elliott.

Elliott in 2015 also invested in U.S. aluminum giant Alcoa Corp., spurring the company to spin off its higher-margin automotive and aerospace parts business. After the company spun off the operation into Arconic Inc., it last year urged the replacement of Chief Executive Klaus Kleinfeld after several profit warnings. Mr. Kleinfeld resigned months later.

Elliott said the investment in Thyssenkrupp was "significant," but, for now, below the required disclosure levels of 3%. It didn't spell out what changes it wanted the company to make, saying only it "looks forward to engaging in a constructive dialogue" with management and the board "in the near future."

Broker Jefferies said Elliott might push Thyssenkrupp to dispose of its material-services business, launch an initial public offering of its steel business or introduce measures to turn around its capital-goods businesses. It might also join calls from Cevian to simplify corporate structure, Jefferies said.

Shares in Thysenkrupp rose 1.1% midmorning in Europe. The stock has risen more than 8% this week amid speculation Elliott was getting involved.

(END) Dow Jones Newswires

May 24, 2018 07:17 ET (11:17 GMT)

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