Spinoff Odds & Ends: thyssenkrupp Buyer, Conti’s Delayed IPO and Gannett Proxy Battle Victory

Let’s kick off the week with another edition of the always eclectic Spinoff Odds and Ends:

1) Thyssenkrupp Update

We provided an update on thyssenkrupp’s (TKAMY) new ‘strategic direction’ last week. The JV with Tata Steel is out and the elevator business spinoff was scrapped for an IPO instead. Just a few days later though, the story seems to have taken yet another twist. Instead of an IPO, the business might just end up sold to Finland’s Kone. According to Reuters (they seem to have the inside scoop on all things thyssenkrupp), Kone is currently ‘assessing the viability of a bid’ for the business, but there are concerns about its ability to fund the deal as well as potential anti-trust concerns. Oh, is that all? Nope, analysts at Barclay’s also raised the possibility of labor opposition to a deal, but noted that the potential synergies may ultimately tip the scales towards M&A. The article also notes that other companies, such as Schindler, are also interested in the business.

thyssenkrupp shares jumped over 7% on the news, but according to Retuers, thyssenkrupp’s management apparently still favors an IPO. The idea is to go for the ‘guaranteed’ execution, but once an asset is in play, there usually isn’t much that can be done. This should be interesting to watch.

2) Continental Delays Powertrain IPO

Continuing the theme of spinoffs not going as planned, automotive tier 1 giant Continental AG (CTTAY) announced that it would delay its planned powertrain listing to 2020. The new company will be named Visteco Technologies. Conti’s first quarter was a rough one and saw both automotive volumes and operating profit decline. Investment also increased which is really not a great combo. Timing for the listing will ultimately depend on ‘market conditions’, but the company will provide a status update at the end of the year. ‘Market conditions’ is a commonly used and extraordinarily vague euphemism for ‘whenever we feel like it might do well and have no idea when that might be, but we don’t want this to flop’. The company is upbeat about its prospects for the second half of the year though so perhaps this might turn out as planned.

3) Gannett Wins Proxy Battle Defeating DFM

We’ve written about this situation a number of times already (here and here for example), but the story just keeps moving forward. Digital First Media (DFM), the media company controlled by ‘slash and burn’ fund Alden Global Management, took its hostile bid for Gannett (GCI) to shareholders earlier this month. The company nominated three directors to the board, but in the end, all lost. Gannett won a clean sweep and all eight of its proposed directors were elected. It wasn’t close and the results were a clear rebuke to Alden and DFM whose reputation and tactics were widely derided. It’s unclear what the fund will do next, but in the meantime Gannett needs to figure out a way to fix its business. Alden may not have been likable, but it wasn’t wrong that the business isn’t in great shape. The first step will be finding a permanent CEO after Bob Dickey left earlier this year, but after that, things get tricky. Bloomberg’s Brooke Sutherland suggests paying execs less, but that isn’t going to grow the top line. Hopefully, the company can figure something out that leaves shareholders and employees in a better situation than a sale to an ‘evil’ fund.

Disclosure: Author holds no position in any stock mentioned.