Elliott Discloses Stake in Germany's Thyssenkrupp -- 2nd Update
May 24 2018 - 8:33AM
Dow Jones News
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. Cevian declined to comment on the Elliott investment. The
Swedish investor has expressed frustration that Thyssenkrupp's
management has failed to deliver on its earnings promises while it
has been outperformed by its rivals.
Thyssenkrupp, which traces its roots to the early 19th century
and has long been a symbol of Germany's industrial power, declined
to comment on the Elliott stake.
Mr. Hiesinger in January pledged to carry out a strategic review
once the merger of Thyssenkrupp's European steel business with
those of Tata Steel takes effect. Efforts to complete the deal
announced last year have slowed amid labor talks, delaying the
strategy update to the frustration of investors. Thyssenkrupp has
said it expects the deal to be completed around midyear.
Thyssenkrupp is the latest European company Paul Singer's
Elliott Management has invested in. The firm 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 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.
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 the corporate structure, Jefferies said.
Shares in Thysenkrupp were up 1.5% early afternoon in Europe.
The stock has risen more than 8% this week amid speculation Elliott
was getting involved.
(END) Dow Jones Newswires
May 24, 2018 08:18 ET (12:18 GMT)
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