Thyssenkrupp Shares Rise on Elevator-Deal Report
May 16 2019 - 4:33AM
Dow Jones News
By Nathan Allen
Thyssenkrupp AG (TKA.XE) shares traded higher Thursday,
extending a prolonged patch of volatility for the German
conglomerate, after Reuters reported that Finnish rival Kone Oyj
(KNEBV.HE) is considering a deal for its elevator unit.
The report of Kone's interest comes less than a week after
Thyssenkrupp said it wants to spin off and list the unit, which
could be valued at around 14 billion euros ($15.68 billion),
abandoning previous plans to split the group in two.
Thyssenkrupp's strategic U-turn drove the stock up nearly 30%
last Friday, but shares subsequently returned to trade around their
prior level amid a slew of analyst downgrades, poor second-quarter
results and a general selloff in equities.
Still, at 0754 GMT Thyssenkrupp had regained 3.2% to trade at
EUR12.56, after climbing as high as EUR12.92 earlier in the
day.
Speculation about some form of tie-up between Kone and
Thyssenkrupp has circulated for several years without ever
progressing to a concrete offer. German media has reported that
Thyssenkrupp's largest shareholder, the Alfried Krupp Foundation,
met with Kone shareholder Antti Herlin to discuss a deal as far
back as 2016.
The current deliberations are also likely to prove abortive,
according to Jefferies analyst Alan Spence. While a listing would
provide a quick cash injection to bolster Thyssenkrupp's balance
sheet and fund much-needed restructuring, a merger would likely
become mired in antitrust proceedings, delaying any potential gains
until at least 2021, Mr. Spence said.
Such a deal could produce significant cost savings and the two
companies' portfolios are broadly complementary, despite some
geographical overlap, the analyst said.
Write to Nathan Allen at nathan.allen@dowjones.com
(END) Dow Jones Newswires
May 16, 2019 04:18 ET (08:18 GMT)
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