Maritime Executive: Thyssenkrupp Completes Spin Off of TKMS into Bullish Stock Market

German conglomerate Thyssenkrupp completed the previously announced spin off of its marine shipbuilder TKMS today, October 20, as the market for marine defense manufacturers is booming. The parent company distributed 49 percent of the shares to its shareholders (Thyssenkrupp continues to own 51 percent) and at the end of the day TKMS’s stock value had soared nearly 50 percent giving the one-time subsidiary a higher market capitalization (over $7 billion) than its parent company. 

The conglomerate has been under pressure to improve its results and a had been exploring the partial sale of the shipbuilder. A potential deal with US-based investment group Carlyle collapsed a year ago. Other companies including Fincantieri were rumored to be interested in a deal with TKMS, and Germany’s Rheinmetall was reported to be a potential bidder and recently entered the sector buying NVL (Naval Vessels Lürssen). TKMS’ parent instead elected to spin off half the shares to its investors in what it said was a strategic realignment to make the parent a focused holding company.

“The independence provides TKMS with the necessary entrepreneurial freedom to further develop technological excellence and enable a substantial contribution to national and alliance defense,” said Prof. Dr.-Ing. Siegfried Russwurm, Chairman of the Supervisory Board of Thyssenkrupp.

The parent cited the independence for the shipbuilder giving it the ability to focus on innovation and greater flexibility. The separation the parent said would also provide better access to capital for the shipbuilder both for growth and to develop new technologies, and potentially to pursue partnerships or acquisitions. It, however, also proved to be a pivotal transaction unlocking significant value in the companies for the shareholders.

Over the past five years, TKMS’s order backlog has tripled and currently stands at a record level of €18.6 billion ($21.66 billion). Management has forecast that the company would be targeting medium-term revenue growth of around 10 percent per year and improving margins. 

Timing for the spin-off comes as the market for defense systems and countries’ defense spending is growing rapidly since the invasion of Ukraine and with other global tensions. TKMS has said that it expects the market potential for maritime security to double by the mid-2030s. The company, which has over 9,000 employees, is described as the world’s largest builder of non-nuclear submarines and frigates. It also acquired Atlas Electronics, a division for underwater technology, including mine-sweeping systems.

“We are one of the leading providers in all three ‘dimensions’ of maritime defense, i.e., in surface and submarine shipbuilding as well as in electronics, sensor, and technology solutions,” highlights CEO Oliver Burkhard. He said he believes the company is ideally positioned to meet the dynamic demand of the market.

At the end of 2024, the company received an order extension for four Class 212CD submarines from Germany, and more recently the German Navy commissioned TKMS to modernize six Type 212A submarines. It also received a contract for the reorder of two submarines from Singapore, and it is also building a new research vessel, Polarstern, for the Alfred Wegener Institute, Helmholtz Centre for Polar and Marine Research. TKMS is also reported to be a front-runner both for an order from Canada for a major submarine project and in negotiations with India for a submarine project likely with one of the leading Indian shipbuilders.

Headquartered in Kiel, Germany, the company has been expanding its capacity. In 2022, it acquired the yard in Wismar from the bankrupt MV Werften. They have been gearing up the operation and with the recent departure of the Disney Adventure cruise ship now have the full capacity of the yard which will be used to expand newbuilding operations.