Thyssenkrupp leadership vacuum fuels revamp hopes

Thyssenkrupp shares bounced 8 per cent on Tuesday, lifted by hopes of a deeper restructuring of the German submarines-to-elevators conglomerate after the chairman resigned, leaving the company in a leadership crisis.
Ulrich Lehner quit on Monday following a clash with the main shareholders, saying he was no longer able to safeguard the interests of key stakeholders, days after Chief Executive Heinrich Hiesinger quit.
“A sharply worded resignation announcement from Dr. Lehner makes clear that aggressive restructuring may be in the cards, supporting our 33 euros sum of the parts based price target,” Jefferies analyst Seth Rosenfeld said in a note late on Monday.
“Thyssenkrupp is at a crossroads.”
The resignations of the two senior figures at the company reflect a power struggle among Thyssenkrupp’s management and shareholders which include a foundation that remains its largest shareholder and activist investors Cevian and Elliott.
Lehner had resisted calls to sell the elevators division and, in an interview with German paper Die Zeit this month, accused the activist shareholders of waging a campaign of “psychological terror.”
Lehner, 72, said in his resignation statement that he no longer enjoyed sufficient support to develop the company in the interest of its customers, employees and shareholders and would leave at the end of the month.
He called for a fundamental discussion with shareholders on the future of Thyssenkrupp but made clear that he was opposed to dismantling a company that employs 158,000 people.
“My decision may contribute to creating the necessary awareness with all concerned parties that a break-up of the company and the related loss of many jobs is not an option.”
FOUNDATION ROLE: Hiesinger and Lehner had championed a limited restructuring at Thyssenkrupp, merging Thyssenkrupp’s European steel assets with those of India’s Tata Steel, in a deal sealed on June 30. Activist shareholders have however demanded more far-reaching steps to raise performance at a time when conglomerates around the world, including General Electric , have undertaken sweeping reforms to realise shareholder value.
Lehner’s resignation puts the spotlight on the Alfried Krupp von Bohlen und Halbach foundation, headed by Ursula Gather, a mathematics professor and university rector. It remains Thyssenkrupp’s largest shareholder with a 21 per cent stake.
The Krupp foundation was set up in 1967 as a non-profit dedicated to the wider public good and to maintaining and developing the company, leaving the descendants of the founding family out of the picture.
The foundation held a 25 per cent stake in Thyssenkrupp, formed in a merger in 1999, but lost its power to block major decisions in 2013 when Thyssenkrupp had to raise capital to cover losses from an ill-fated transatlantic expansion drive. Shareholders urged the company to avoid a drawn out battle with activists led by Sweden’s Cevian Capital, which owns an 18 per cent stake. — Reuters

Tom Käckenhoff