(Bloomberg) -- Thyssenkrupp AG (DE:TKAG) is considering splitting into two companies by spinning off non-steel operations, a move that would mark the biggest overhaul of the German conglomerate in decades, according to people familiar with the matter.
Under the scenario being explored, Thyssenkrupp would give existing investors shares of a company that combines elevators, industrial solutions and the components-technology business via an in-kind dividend, the people added, asking not to be identified because the information is private.
Thyssenkrupp would keep a minority stake in the so-called capital goods company, its raw materials trading unit and a 50 percent stake in the steel joint venture with Tata Steel Europe, the people said. They cautioned that no decision has been made yet and that plans could change.
The shares added as much as 9.1 percent to 21.89 euros in German trading.
Cevian Capital, the second-largest shareholder, supports the plan for a split, according to people familiar with the discussions.
Other Options
Other options under consideration by Thyssenkrupp, although less likely at the moment, include merging the profitable elevator unit with Finland’s Kone Oyj or an initial public offering of the elevator unit, people familiar said.
Representatives for Thyssenkrupp and Kone didn’t immediately return a call seeking comment.
Thyssenkrupp is looking at a major restructuring at a time when the company is in turmoil. It still lacks a permanent chairman and chief executive officer, and activist investors have called for dramatic changes that would reduce costs and boost profits in businesses that have long underperformed.
Shareholders including Cevian Capital have previously blamed an overly complicated business structure for Thyssenkrupp’s weak performance, and said the company needs to find “the right structure” to be competitive.
The company’s labor representatives make up a majority on the board and will have a significant influence over any decision. Thyssenkrupp’s supervisory board is scheduled to meet in the coming days, the people said.
Reuters reported earlier Thursday that the company is considering an overhaul.
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