Thyssenkrupp faces ‘aggressive restructuring’ as bosses quit
Turmoil has erupted at German industrial giant Thyssenkrupp after a mega deal merging its steelmaking arm with India’s Tata, with its bosses quitting amid an acrimonious battle with shareholders on whether to break up the institution.
The leadership chaos sparked fears of further job losses as some key investors push for radical surgery on the two-century-old conglomerate that makes everything from elevators and submarines to car components, turnkey industrial installations and steel.
“It is clear that Thyssenkrupp is at a crossroads … aggressive restructuring may be on the cards,” analysts at US investment bank Jefferies wrote on Tuesday after supervisory board chief Ulrich Lehner followed CE Heinrich Hiesinger out of the door late on Monday.
Hiesinger, who quit earlier in July, and Lehner were both fierce defenders of keeping Thyssenkrupp’s structure intact.
“I take this step consciously to enable a fundamental discussion with our shareholders on the future of Thyssenkrupp,” Lehner said in his parting statement. “A break-up of the company and the related loss of many jobs is not an option,” he warned in a final swipe at his opponents.
Tracing its roots back to 1811 and a household name of German industry for more than a century, Thyssenkrupp booked €41.5bn of revenue in its 2016-17 year and employs some 159,000 people worldwide.
July should have been a month of optimism for the Essen-based group, after it sealed a deal in late June with India’s Tata to merge their European steel operations.
Bosses had hoped to find €400m-€500m of annual savings, in part by shedding up to 4,000 jobs, persuaded that the merger would secure Thyssenkrupp’s historic core against competition from a flood of cheap Chinese steel.
But activist shareholders such as Swedish investment firm Cevian and US hedge fund Elliott want management to go further. The two shareholders have been pushing for its dismantling with “methods that could even be described as psychological terrorism”, Lehner told weekly Die Zeit recently.
Beyond their fundamental differences with bosses over the company’s direction, the investors were also displeased by the details of the Tata deal.
Hiesinger provided powerful German union IG Metall guarantees to preserve jobs and keep sites open.
News that Hiesinger backer Lehner had resigned lifted Thyssenkrupp’s stock to the top of the DAX index of blue-chip German shares, gaining 8.6% in Tuesday morning trade.
The share price appears to have tracked investors’ hopes of realising their dream of breaking up the group to sell off its units or list them independently on the stock market.
Its value had fallen in the wake of the Tata deal as the Alfried Krupp Foundation, with 21% of the group, rejects unbundling. But the institution, which wants Thyssenkrupp to be preserved as a whole, no longer has the blocking minority needed to hold off other shareholders.