thyssenkrupp Spinoffs: Much ado about nothing
thyssenkrupp AG (TKAMY) is not a stranger to these pages. In the past, we wrote about both a stainless steel spinoff(all the way back in 2011), which didn’t spinoff as the division was instead sold to Finnish competitor Outokumpu , and the elevators spinoff which was also cancelled in favor of a sale to private equity. And now, after a deal to sell a minority stake in maritime defense division TKMS to Rheinmetall fell through in March, thyssenkrupp has decided to spin off the stake instead.
thyssenkrupp’s TKMS Spinoff Plan
Well, perhaps third time is the charm. In August, thyssenkrupp announced that shareholders has approved the spinoff of its maritime defense business as TKMS. Following the TKMS spinoff, which thyssenkrupp is hoping to complete before the end of calendar year 2025, shareholders will own 49% and thyssenkrupp will retain 51%. In the spinoff, shareholders will receive one share in the new TKMS AG & Co. KGaA for every 20 shares held in thyssenkrupp AG, maintaining their proportional ownership.
In announcing the move, thyssenkrupp shared the usual boilerplate about being more flexible and access to capital markets. TKMS has 8300 employees and is a major vendor for European militaries. With the ongoing war in Ukraine and with the United States pulling back military support globally, TKMS’s prospects have markedly improved as European militaries ramp up spending.
TKMS is in an excellent economic position and has a solid foundation for independent development. The order backlog has grown significantly in recent years and currently exceeds 18 billion euros. Recent major orders include several submarine projects for European and international navies, as well as the construction of the research vessel Polarstern II. Targeted investments, structural optimization, and the integration of key technology competencies – such as through the acquisition of Atlas Elektronik – have enhanced operational performance. Project lead times have been shortened, margins improved, and overall performance increased. The robust, cash-generating business model ensures stability and planning reliability for both the thyssenkrupp Group and the future shareholders of the independent TKMS AG & Co. KGaA.
In addition, TKMS is making targeted investments in innovative technologies, such as autonomous systems and digitalization, and is thus well positioned to meet future requirements in the maritime defense market.
The spinoff is part of thyssenkrupp’s evolution from conglomerate to holding company. But don’t worry the holdings will all be “entrepreneurially responsible”, whatever that means.
The independence of TKMS marks a key milestone in the strategic realignment of thyssenkrupp AG. With the spin-off of a 49 percent minority stake, thyssenkrupp is pursuing the goal of transforming itself from a broadly positioned industrial conglomerate into a focused, strategically managed holding company. In the future, thyssenkrupp AG will act as a streamlined management holding company, under whose umbrella independent and entrepreneurially responsible holdings are united.
To be honest, I always find it challenging to write about and to analyze European spinoffs and companies. There is a different language, a different business culture and I always feel like I am losing something in translation. Given that, I am sure that I got something wrong, left something out and missed nuance. If you notice that, I’d be most appreciate if you’d kindly let us know in the comments.
Disclosure: The author holds no position in any stock mentioned