FRANKFURT (Reuters) -Shareholders in Thyssenkrupp are scheduled to vote on a planned spin-off of its defence division on Friday, as a radical shift in European spending on defence has raised
Thyssenkrupp Shareholders Approve Spin-Off of Defence Division
Thyssenkrupp's Defence Division Spin-Off
By Christoph Steitz and Tom Käckenhoff
Impact on Shareholder Value
FRANKFURT/DUESSELDORF (Reuters) -Thyssenkrupp shareholders on Friday approved a planned spin-off of its defence division, the conglomerate's latest restructuring move, aimed at fully capturing the value of the division amid rising military spending in Europe.
Government Influence and Control
The order book of Thyssenkrupp's TKMS division - which makes submarines, frigates and develops mine-sweeping technologies - has swollen to more than 18 billion euros ($21 billion) from 11.7 billion at the end of September last year.
Response to Increased Defence Spending
That has in turn boosted shares of its parent, which have more than doubled year-to-date, while more ambitious defence spending plans have also benefited European defence peers more broadly.
Thyssenkrupp plans to spin off 49% of TKMS to its existing shareholders while keeping the remaining stake.
The Alfried Krupp von Bohlen and Halbach foundation, Thyssenkrupp's largest shareholder with a 21% stake, welcomed the vote, saying the spin-off of TKMS opened up new business opportunities, without elaborating.
Thyssenkrupp said on Friday it expected the spin-off and separate listing of TKMS to be formalised in mid-October.
Shares in the company traded 3% higher at 1313 GMT following the vote.
Last month, Berlin reached a preliminary agreement with Thyssenkrupp that guarantees the government will retain influence at TKMS, as it seeks to keep a certain level of control over strategic defence assets.
Labour unions have called for Berlin to take a blocking minority in TKMS to ensure stakes in the business do not fall into the wrong hands, but the government has so far not done so.
Stephanie Schmoliner of labour union IG Metall, who also serves as deputy chairman of TKMS's supervisory board, repeated these demands on Friday, saying a government stake was "essential".
The increase in defence spending comes in response to Russia's invasion of Ukraine, and as U.S. President Donald Trump has called on NATO's European members to raise their military budgets.
($1 = 0.8583 euros)
(Reporting by Christoph Steitz and Tom Kaeckenhoff. Editing by Elaine Hardcastle and Mark Potter)
