Business News

Thyssenkrupp to spin off elevators, car parts in major group overhaul

Key Points
  • The German conglomerate said it would spin off its elevators, auto parts and plant engineering divisions into a separately listed company.
  • Shares rise as much as 17 percent.
A view of the storage area of galvanized coiled steel following manufacture at ThyssenKrupp steelworks on January 17, 2018 in Duisburg, Germany.
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Germany's Thyssenkrupp is planning to spin off its elevators, car parts and plant engineering divisions, giving in after years of shareholder pressure in what marks the biggest overhaul since the merger of Thyssen and Krupp 20 years ago.

The plans are a major victory for activist shareholders Cevian and Elliott which have demanded concrete structural measures to improve the group's operational performance, pointing out its sprawling conglomerate structure.

Thyssenkrupp's supervisory board is due to sign off on the plans at an extraordinary meeting on Sunday, which also marks the end of the company's financial year.

Shares in Thyssenkrupp rose as much as 17 percent after the official announcement, which came after a Reuters report saying the group was mulling the separation of major business divisions.

"In the past weeks various strategic options have been publicly discussed and often hyped," Thyssenkrupp Chief Executive Guido Kerkhoff said. "Now we are proposing a solution that not only creates value for our shareholders but also significantly improves the prospects for our businesses."

Thyssen's strategy evaluation comes as rival conglomerates including Siemens and General Electric slim down their businesses.

The group has been in crisis-mode since the sudden departure of both its chief executive and chairman in July, bowing to pressure from shareholders.

Thyssenkrupp has in the past said it wants to focus on strengthening its capital goods business, which comprises elevators, car parts and plant engineering.