Thyssenkrupp Plans to Split into Two Companies--Update
September 27 2018 - 1:31PM
Dow Jones News
By Ruth Bender and Nathan Allen
BERLIN -- German steel conglomerate Thyssenkrupp AG is planning
to split into two listed companies, the company said Thursday,
taking a drastic strategic move following months of pressure from
activist shareholders to improve profits and find a simpler
structure.
Thyssenkrupp said the split would take place in the form of a
spinoff, with two companies equal in size -- one comprising the
company's materials operations and the other the group's capital
goods businesses, which include the elevator and automotive
components segments. Both companies will be listed and keep the
name Thyssenkrupp.
"The management board is convinced that this new structure will
allow the businesses to develop better and concentrate on their
strengths," Thyssenkrupp said in a statement.
The company said it would propose the split to its supervisory
board in a meeting Sunday. If the board approves, the split is
still subject to shareholder approval.
Shares jumped 18% on the news, bringing relief to investors
after months of turmoil at the German industrial icon, which has
seen its share price plunge.
"This could be a decisive turning point," said Marc Gabriel, an
analyst from Bankhaus Lampe.
The move marks a victory for activist shareholders, who had
pushed for an overhaul. They criticized Thyssenkrupp's conglomerate
structure for being inefficient, too costly and too
bureaucratic.
"This strategic decision is an important step to tackle the
underperformance of the past," said Lars Förberg, co-founder of
Swedish activist investor Cevian Capital AB, which holds roughly
18% in Thyssenkrupp. "This will reduce complexity, promote
entrepreneurial freedom and agility, and enhance the ability of the
ThyssenKrupp's businesses to realize their potential.
Hedge fund Elliott Management Corp., which holds roughly 3%,
declined to comment.
The split however also shows Thyssenkrupp's efforts to find a
solution that would allow the group to stay independent, in two
future companies. The conglomerate for years faced calls from some
shareholders to break-up its disparate array of activities,
including calls to shed its historic steel-producing operations,
whose profitability has been lower than the units that make
elevators and warships.
The Krupp foundation, which for decades was the steering force
behind Thyssenkrupp as its top shareholder currently holding 21%,
said it wasn't opposed to the plan.
(More to Come)
Write to Ruth Bender at Ruth.Bender@wsj.com
(END) Dow Jones Newswires
September 27, 2018 13:16 ET (17:16 GMT)
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