Union sets out demands as $17 billion Thyssenkrupp elevator sale nears endgame
DUESSELDORF/FRANKFURT (Reuters) – Any new owner of Thyssenkrupp’s (TKAG.DE) prized elevator unit not only has to provide guarantees against job cuts and plant closures, but also commit to staff involvement and investment plans, Germany’s largest union told Reuters.
“We want to conclude the negotiations as fast as possible and then sign an agreement with the chosen buyer,” IG Metall’s Knut Giesler, chief staff negotiator in Thyssenkrupp’s efforts to sell its elevator division, said on Tuesday.
Thyssenkrupp on Monday narrowed the field of bidders for the world’s fourth-largest lift maker and was focusing on selling a majority or all of the unit to either Blackstone (BX.N), Carlyle (CG.O) and the Canada Pension Plan Investment Board, or Advent and Cinven [CINV.UL].
“There are two, three things that still need to be ironed out. That’s the task of the next one and a half weeks,” said Giesler, who serves as deputy chairman of the supervisory board of Thyssenkrupp Elevator Technology.
Labour representatives control half of Thyssenkrupp’s supervisory board – which is expected to meet on Feb. 27 – and their consent will be key to any transaction.
The sale of Thyssenkrupp Elevator Technology, potentially Europe’s largest private equity deal in 13 years, will be key for the future of the German conglomerate, which has been hit by profit warnings and delayed restructuring steps.
The unit employs roughly 53,000 people, most of them outside Germany, and is valued at about 16 billion euros ($17 billion), based on most recent private equity bids.
Giesler said as well as securing jobs, sites and “co-determination” arrangements at supervisory board level, any new owner must also ensure that debt repayments – likely to result from any private equity deal – will not overly burden the division.
He said the future of Thyssenkrupp Elevator would have to be secured through investments, adding this involved a “decent” triple-digit million euro sum per year as well as an agreed level of research and development spending.
“For us it’s not decisive how much is being paid,” Giesler said. “We want to secure staff,” he added, also expressing his preference for Thyssenkrupp to keep a minority stake in the business.
Sources close to the process have said Thyssenkrupp is likely to keep a stake of between 20% and 30% in the division, which competes with United Technologies Corp’s (UTX.N) Otis, Switzerland’s Schindler (SCHP.S) and Finland’s Kone (KNEBV.HE).
Analysts at Exane BNP Paribas said a stock market listing, which remains an option, or a partial sale were likely to be the preferred options of Thyssenkrupp, “as the group cannot afford to lose access to the reliable source of (cash flow) from Elevators at this stage”.
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