thyssenkrupp plans separation into two independent units

In an extraordinary meeting of the supervisory board on 30 September, the executives of thyssenkrupp AG will propose a separation of the group into two separately stock-market listed companies, Kallanish learns. That date is coincidentally the last day of the company’s fiscal year.

The split will be made between materials’ activities, which include steel production and steel distribution, and industrial-technological services. Both units are to keep the traditional name, then figuring as thyssenkrupp Materials AG and thyssenkrupp Industrials AG.

“Over the past weeks, there were many strategic options discussed for thyssenkrupp,” says interim ceo Guido Kerkhoff, alluding to proposals for reorganising the group. “However, the world is not black and white. There is not only a ‘keep on’ or a ‘dismantling’, but other alternatives which do justice to both the responsibility for the workforce and the sustainability of the company,” he continues. He adds that the solution now presented will create value for shareholders as well as improve the prospects for the development of business.

Shareholders will hold 100% in tk Materials AG, and a majority in tk Industrials AG, with the former keeping a stake in the latter. Industrials will encompass the elevators, automotive supply and plant-building businesses. Materials will include the steel/metals distribution activities, the 50% in the future joint venture with Tata Steel Europe, plus the marine technology business.

Both companies would be of a comparable size. The activities of the future tk Industrials achieved a revenue of €16 billion ($18.7 billion) with 90,000 employees in the past fiscal year, while the Materials business turned over €18 billion with some 40,000 employees. The latter’s figures do not include the joint venture with Tata, which will be accounted “… at equity”.

The separation process is projected to take 12 to 18 months. A separate listing would reduce the complexity of the thyssenkrupp share, the company notes. tk Industrials would be attractive for investors interested in stable cash flows and attractive growth prospects, while Materials would address investors that bank on cyclical business, the company says.