12.5 billion! This military industrial group will divest its shipbuilding business
2024-04-09 09:00
Screenshot of ThyssenKrupp Group's official website
Recently, ThyssenKrupp, a renowned German military industrial enterprise, announced that it is collaborating with Carlyle Group, a US private equity firm, on the divestiture of its marine systems company (TKMS) and its shipbuilding business. Both parties will conduct due diligence on this business restructuring, and ThyssenKrupp may also sell a portion of TKMS's equity to Carlyle Group.
Relevant personnel from ThyssenKrupp's board of directors stated that Carlyle Group's participation is one of several options for ThyssenKrupp to divest its shipbuilding business. With Carlyle Group's active participation, ThyssenKrupp is taking necessary measures to conduct an open assessment of the relevant business. This person also emphasized that cooperation with Carlyle Group does not mean that ThyssenKrupp will rule out the possibility of parallel review of other divestiture plans. At the same time, ThyssenKrupp is also negotiating with the German federal government regarding the government's participation in the restructuring of ThyssenKrupp's shipbuilding business.
Reuters reported that ThyssenKrupp plans to sell a 25% stake in TKMS, primarily to alleviate the burden caused by ThyssenKrupp providing billions of euros in guarantees to customers. Industry insiders say that TKMS is valued between €1.2 billion and €1.6 billion (approximately RMB 12.5 billion), but industry insiders believe that investing in the company currently is not wise, as its cash flow is unstable and it needs to provide guarantees for a large number of long-term orders.
Image/Source: ndr.de
It is understood that TKMS is a world-renowned manufacturer of submarines, frigates, and other defense equipment. In 2022, the company received an order for €8.5 billion for the construction of new submarines, building a total of 9 submarines of 2 types for the Israeli, Norwegian, and German navies. At the same time, the company also announced the acquisition of the Wismar shipyard, which belonged to the MV Werften shipbuilding group under the former Genting Hong Kong Group, for the construction of submarines and future frigates. As of June 2022, TKMS had an order backlog exceeding €15 billion. In the first quarter of fiscal year 2023-2024, the company's submarine orders increased by another €529 million.
Image/Source: Financial Times
In this regard, the Financial Times reported that the large number of naval vessel equipment orders is an important reason why ThyssenKrupp hopes the German government will consider taking a stake. Against the backdrop of the ongoing Russia-Ukraine conflict and the German government's desire to boost the level of its defense industry, the spin-off and sale of the shipbuilding business by ThyssenKrupp, a German military industrial giant, will be conducive to Germany establishing a powerful national shipbuilding company, thereby better meeting the needs of the German navy's equipment construction and exports.
It is worth noting that in June last year, TKMS also signed a memorandum of understanding with Mazagon Dock Shipbuilders Limited in India. The two parties will participate in the bidding for the design and construction project of six new conventional submarines for the Indian Navy, with a total value of approximately €5 billion.
Currently, TKMS has 7,800 employees, of whom 3,100 are from the Kiel shipyard. Previously, the Kiel shipyard had invested approximately €250 million in expanding its infrastructure to meet the growing demand for submarine construction.
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