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GERMANY-ECONOMY-STEEL-MANUFACTURING
Germany’s embattled Thyssenkrupp plans to split company in two
FRANKFURT AM MAIN, Sept 28, 2018 (BSS/AFP) – The fate of historic German
industrial conglomerate Thyssenkrupp appeared sealed Thursday, as executives
laid out a plan to split it in two despite resistance from the government and
a major shareholder.
Stock in the group soared following a company statement that outlined a
division of the 207-year-old firm, which manufactures products from
elevators, trains and car parts to steel.
“The executive board will suggest to the supervisory board on Sunday…
splitting the group into two significantly more focused and effective firms,”
bosses said in a statement.
“The industrial goods and the raw materials businesses will each become
independent, listed companies,” they added.
Shareholders in the present Thyssenkrupp would receive new shares in both
Thyssenkrupp Materials — with 90,000 employees and annual revenues around 16
billion euros ($18.7 billion) — and Thyssenkrupp Industrials, with 40,000
workers and 18 billion in revenue.
Shares in the group shot 17 percent higher following the announcement. The
closed the day 9.9 percent higher at 22.06 euros, still topping the DAX index
of blue-chip German shares which was up 0.4 percent.
Before the plan can go ahead both the supervisory board and a general
shareholders’ meeting must give the green light, with directors expecting to
move “in 12 to 18 months”.
On the workers’ side, labour representatives have long feared that a
further restructuring could bring job cuts.
Recently-elected works council chief Dirk Sievers told regional newspaper
WAZ earlier this month that “we won’t block reasonable changes”.
“But we won’t accept any restructuring of the company against the
interests of the employees,” he added.
“The workers are the ones who can’t just say, ‘we’re off’.”
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GERMANY-ECONOMY-STEEL-MANUFACTURING 2 FRANKFURT AM MAIN
– ‘Psychological terrorism’ –
Thyssenkrupp’s plan for a breakup puts it on the same path as other
behemoths of German and global industry.
Industrial giant Siemens is on course to reshape itself into a more
adaptable structure of independent units, while chemicals powerhouse Bayer
has long since spun off many traditional activities to focus on
pharmaceuticals and agrichemicals.
“Today we are a single tanker. We must become a coordinated and efficient
fleet of ships,” Siemens chief executive Joe Kaeser told German media last
year.
In Thyssenkrupp’s case, the impetus for the breakup has come from activist
shareholders like Swedish investment firm Cevian and US hedge fund Elliott,
which argued the split could unlock value for shareholders.
Over the summer, their persistent pressure first drove out chief executive
Heinrich Hiesinger and later supervisory board chief Ulrich Lehner.
In a newspaper interview, Lehner complained bitterly of “methods that
could even be described as psychological terrorism” employed by the
investors.
Meanwhile Essen-based Thyssenkrupp’s finances dived into the red in the
third quarter of its financial year, it reported last month, with a net loss
of 131 million euros ($153 million) between April and June prompting it to
lower its full-year forecast.
Slower sales and higher-than-expected costs in the industrial solutions
division were weighing on business, it said.
Among the projects causing headaches were a marine project in Turkey, a
cement plant in Saudi Arabia and a biofuel power plant in Australia.
The sobering performance overshadowed the support from Chancellor Angela
Merkel’s left-right coalition government for preserving Thyssenkrupp.
In July, Economy Minister Peter Altmaier and Labour Minister Hubertus Heil
had spoken out in favour.
But neither Berlin nor longtime anchor shareholder the Krupp Foundation,
which still holds 21 percent of the group, could hold executives back from
the split.
BSS/AFP/HR/1000