After the merger of steel with Tata, investors continue to put pressure on Thyssenkrupp

H Einrich Hiesinger reached vigorously. In just a few shots, the president of the Thyssenkrupp industrial group cuts a connecting pin into a piece of steel at the Solvay Library in Brussels and immediately hands the hammer back to Natarajan Chandrasekaran.

The head of the Indian industrial conglomerate Tata lobes and connects two steel plates, one with the Thyssenkrupp inscription, the other with Tata Steel imprint. The two leaders thus symbolically seal the creation of a new joint venture in which the Dax group carries its steel business and the Indian competitor its European business with factories in the Netherlands and the United Kingdom.

The merger, by the way, the most important of the steel industry after the merger of Arcelor and Mittal into a new world leader in 2007, creates today a group with 17 billion euros in turnover and nearly 50,000 employees. For Hiesinger, there is the long-awaited opportunity of a fresh start with the rest of Thyssenkrupp, that is the activity of lifts, subs, large factories and auto parts, which still accounts for more than three quarters of the turnover.

his side

In the future, the traditional turf company should finally be the diversified engineering and engineering companies, so broad, which Hiesinger practically since its inauguration in 2011 speaks.

It is hardly surprising that Hiesinger qualifies the merger, negotiated for over two years, as a "historic step". And this is not the only superlative out of his mouth. "We are doing something good," he continues. In any case, Thyssenkrupp has the greatest impact in the history of more than 200 years of business.

But as long as the nostalgic can complain, the experts have Hiesinger on his side. Because Thyssenkrupp reacts with the spin-off of the steel division to the ongoing structural crisis in the industry. Overcapacity, particularly from China, has been pushing prices for years. This threatens Europe's major companies in Brussels with the next emissions trading reform.

And even the trade war, at the instigation of US President Donald Trump, will not be without consequences. "We can not wait for Europe to find a solution, we must act ourselves," Hiesinger explains, speaking of a market-oriented approach. "In the long run, we will ensure a competitive position in the European steel industry."

Thyssenkrupp Tata Steel, Europe's second largest industrial company, will achieve economies of scale, which this is through joint purchases and sales. certain products, but also through grouped research and development. Thyssenkrupp CFO Guido Kerkhoff estimates the synergy effects between 400 and 500 million euros per year.

The union accepts job cuts

Up to 4,000 jobs are lost, half of them in Germany, even IG Metall and the company committee can fix it. In any case, the approval of the Supervisory Board, where the staff representatives have always had a strong position, would have been very fast in advance despite the great rattling of the sword. Probably also because there is a guarantee of employment for the remaining employees in Germany until September 30, 2026 and the promise of a long term backup of the site.

Hiesinger does not have much time to enjoy it. The speeches by him and his counterpart Chandrasekaran in Brussels were barely over when the investors came forward. "Mr Hiesinger must now speed up the restructuring of the company so that Thyssenkrupp is weatherproof before the next economic slowdown," explains, for example, Ingo Speich, portfolio manager of the company's 39 Investment Union Investment. And these are even more reserved words.

The biggest detractors of Hiesinger are the American hedge fund Elliott and the investment company Cevian Capital. Both have recently requested the replacement of Hiesinger or even brought a bust of Thyssenkrupp into play. Even after the steel case, they continue to press. "It is now imperative to seize the opportunity to eliminate the significant and continuing underperformance of the industrial sectors," says Lars Förberg, founding partner of Cevian. Thyssenkrupp had failed with the conglomerate's strategy and its matrix organization. "Now, for each of the divisions must be rigorously examined, what structure and what property is best suited."

Steel IPO is already prepared

Hiesinger will deliver in the coming week. Next, the board should meet again and discuss the new strategy the manager is currently working on. It should not be revolutionary, at least that is what is meant by the business environment. However, individual sales seem conceivable. For example, material trading material services might be subject. Potential customers are already ready. The steel merchant of Duisburg Klöckner & Co, for example, has reaffirmed its interest for months

This is a sale, but in the steel joint venture, Thyssenkrupp still holds a 50% stake. The company is managed as an "equity-accounted investment" and is therefore off-balance sheet.

As a result, the equity ratio of the rest of the group is now going from just under ten percent to at least 15 percent. In addition, Thyssenkrupp expects an annual dividend, estimated internally at an amount of three figures million euros. In the medium term, an IPO is sought, according to reports, it is even ready. Thyssen and Tata must remain involved with at least 50% by 2026, that is to say, hold the majority.