German Thyssenkrupp puts an end to the leadership vacuum and opens the way for the split

ESSEN / DUESSELDORF (Reuters) – Thyssenkrupp (TKAG.DE) put an end to his leadership and strategy crisis on Sunday when his supervisory board held his two management positions and approved his intention to split the German conglomerate in two.

This decision follows months of turbulence in the submarine elevator group, including a warning on the profits and pressures exerted by activist shareholders Cevian and Elliott, and paves the way for the company's biggest restructuring. for decades.

Bernhard Pellens, a member of the supervisory board of Thyssenkrupp since 2005, has been unanimously appointed president to replace Ulrich Lehner, who left the group in July less than two weeks after the resignation of CEO Heinrich Hiesinger .

Guido Kerkhoff, 50, has been appointed managing director for a five-year contract, confirmed Thyssenkrupp, confirming him in a role he had held temporarily since the resignation of Hiesinger.

"I would like to thank the Supervisory Board for the trust and clear support it has given to the proposed new configuration of Thyssenkrupp proposed by the Executive Board," Kerkhoff said in a statement.

"Our solution is responsible and also serves the interests of employees, customers and shareholders. We will now begin the implementation decisively.

As part of the proposed structure, Thyssenkrupp will transform its investment goods business – elevators, automotive equipment and production facilities – into a separate listed entity called Thyssenkrupp Industrials.

Material trading, shipbuilding and 50% stake in a joint venture with Tata Steel (TISC.NS) will still be part of Thyssenkrupp, which will be renamed Thyssenkrupp Materials.

Reuters was the first to announce last Thursday that Thyssenkrupp was considering a major overhaul, including a separation of functional units.

According to the pro forma figures for 2016/17, Thyssenkrupp Industrials had adjusted earnings before interest and taxes of 1.2 billion euros (1.4 billion dollars), while Thyssenkrupp Materials realized 550 million euros. euros, according to the slides released Sunday by investors.

"COURAGEUSE"

Thyssenkrupp Materials will initially hold a minority stake in Thyssenkrupp Industrials, which it will sell completely at some point, the graphs showed.

Susanne Herberger, a member of the supervisory board, told Reuters that a framework agreement between management and representatives of the social staff governs our forced layoffs.

Approval of this decision, announced Thursday by the company, was widely expected after being supported by the Alfried Foundation Krupp von Bohlen and Halbach and Cevian, the two largest shareholders of Thyssenkrupp, and representatives of the workers.

The three parties represent 13 of the 20 members of the board of directors. Two seats are vacant after the departure of Lehner and the former Deutsche Telekom (DTEGn.DE) Director General René Obermann.

The Nominating Committee of the Supervisory Board will continue its search to fill the two vacancies. Sources told Reuters that Cevian, already represented by Jens Tischendorf, was seeking a second seat on the board of directors.

"With this new configuration, Thyssenkrupp is taking a bold step forward. Thyssenkrupp now has a compelling plan to bring businesses closer to their customers and increase their performance, "said Pellens, 62.

Professor of Business Administration and International Accounting at the Ruhr University in Bochum and Honorary Professor at Tongji University in Shanghai, Mr. Pellens is also Chairman of the Audit Committee of the Board of Directors.

Ingo Speich, fund manager at Union Investment, a shareholder of Thyssenkrupp, warned that the composition of Pellens' board of directors should not exceed 15 years, including 13 years.

"Pellens could be acceptable as chairman of the supervisory board, given the difficult circumstances and the fact that some candidates refused the position. But he has never run a business and so can only be an interim candidate, "Speich said.

Cevian Tischendorf has also been appointed to the audit committee, said one familiar with the matter.

Ursula Gather, director of the Krupp Foundation, the largest shareholder of Thyssenkrupp, has welcomed the appointments of Kerkhoff and Pellens. She added that Pellens had supported and formed many strategic decisions during his term on the board.