Thyssenkrupp shares are lower Friday, as the German industrials group announced its plans to separate its two divisions, in the form of a ‘spin off’. Both parts of Thyssenkrupp will be renamed and separately listed, allowing each new ‘firm’ to focus on a more specific market sector.
By 1400 BST, Thyssenkrupp shares were 1.27% lower at €21.78. The stock has been moving broadly higher in recent weeks. The stock also moved higher in the initial aftermath of the announcement.
Thyssenkrupp split plans
The German firm said Thursday, that it is planning to separate its elevators, auto parts and plant engineering divisions into a separately listed company from its materials, steel and marine businesses.
The move is being described as the largest overhaul since the merger of Thyssen and Krupp some 20 years ago.
“In recent weeks, a wide variety of strategic options for Thyssenkrupp have been discussed in public and very often exaggerated,” said Chairman of the board, Guido Kerkhoff.
“We are now proposing a solution that not only creates value for our shareholders, but also significantly improves the development prospects of our businesses,” he added.
New Thyssenkrupp share set up
Under the plans, which will be put to a vote at an extraordinary meeting Sunday, the two new companies will be named Thyssenkrupp Materials AG and Thyssenkrupp Industrials AG.
Existing shareholders stocks will be split, they will continue to hold 100% of Thyssenkrupp Materials AG (formerly Thyssenkrupp AG). They will also, initially, hold a majority of Thyssenkrupp Industrials AG shares, the company said.
“We are planning to create two independent companies with a common DNA and strong roots from over 200 years of common history,” Kerkhoff said. “But we have more in common than just history - a common understanding of performance and values. Above all, we are driven by a strong desire to be a technology leader.”
If the plan is approved, both companies will be quite closely matched, based on 2016/17 data. Thyssenkrupp Industrials AG would generate sales of around €16 billion with around 90,000 employees. Meanwhile, Thyssenkrupp Materials AG would have sales of around €18 billion, but with fewer employees, around 40,000.