Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

Thyssenkrupp kicks off sales process for prized elevator unit

Published 04/09/2019, 16:10
© Reuters. Thyssenkrupp's logo is seen close to the elevator test tower in Rottweil
KNEBV
-
TKAG
-
RTX
-
APO
-
KKR
-
6501
-
SCHP
-

By Christoph Steitz, Arno Schuetze, Tom Käckenhoff and Edward Taylor

FRANKFURT/DUESSELDORF, Germany (Reuters) - Thyssenkrupp (DE:TKAG) has started a structured process to look for potential buyers of all or parts of its elevator unit, its most profitable division.

Letters asking for expressions of interest for the unit, valued anywhere between 12 billion and 17 billion euros (£11-£15 billion), were sent out to private equity and strategic investors, three people familiar with the matter said.

Recipients included private equity groups KKR (N:KKR), Bain, Advent, CVC, EQT, Blackstone (N:BX), Partners Group (S:PGHN) and Apollo (N:APO) as well as rivals Kone (HE:KNEBV), Schindler (S:SCHP), Otis (N:UTX) and Hitachi (T:6501), the people said.

The parties declined to comment or were not immediately available for comment.

Sources had told Reuters last week that Thyssenkrupp had launched a formal auction process in addition to plans for an initial public offering (IPO), adding chief executive Guido Kerkhoff might be forced to sell the whole unit.

They said consortia were already being formed.

Interested parties are expected to respond to the letters within two weeks, the people said. One person said that Thyssenkrupp was seeking to keep a stake of more than 25% in the unit and expected to sign a deal by year-end.

"We have clearly stated that, in addition to preparing for the IPO, we are also examining expressions of interest from potentially interested parties," a spokesman for Thyssenkrupp said on Wednesday, adding a structured process had been started.

Shares in the group, which are expected to be excluded from Germany's benchmark index this month, rose as much as 5.5% on the news and were up 3.5% at 1556 GMT.

Elevator Technology is by far Thyssenkrupp's most profitable division and a sale could give the cash-strapped group enough ammunition to fix its other struggling business, including plant engineering, steel and car parts.

Thyssenkrupp, suffering from four profit warnings and two botched restructuring attempts, is under pressure to rake in fresh cash due to a weakened balance sheet that has come under pressure following recent rating downgrades by S&P and Moody's.

Thyssenkrupp will have to weigh valuation against speed and execution certainty, the sources said.

They added that strategic players were likely to offer a higher price due to expected synergies, while possible antitrust issues may complicate a deal.

After a failed joint venture deal with Tata Steel (NS:TISC), Thyssenkrupp does not want to have another deal scuppered by regulators, they said, adding private equity buyers are not expected to face antitrust scrutiny.

© Reuters. Thyssenkrupp's logo is seen close to the elevator test tower in Rottweil

The sales price will, however, also depend on factors like job and site guarantees, which employee representatives are expected to press for, they added.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.