Shortly before Christmas, the naval subsidiary of the crisis-ridden steel group Thyssenkrupp was able to secure an extension of the major order from 2021 for six identical Type 212CD submarines submarines – two for Germany and four for Norway. Now there are four additional boats for the German Navy and Norway’s intention to option a further two boats. Business with the conventional submarines, which cost around half a billion each, is therefore running smoothly – which is why numerous companies are currently expressing their interest in acquiring Thyssenkrupp Marine Systems (TKMS).
According to TKMS CEO Oliver Burkhard in an interview with the Frankfurter Allgemeine Zeitung, capacity is slowly running out due to the large number of orders: “This is of course a privileged situation as a seller,” said Burkhard. The company is currently well positioned for the new orders, but if further orders are received, TKMS will have to consider “putting a third shipyard into operation” in addition to the sites in Kiel and Wismar. This is still a long way off, but there are enough shipyard locations, “there are always some for sale,” said Burkhard.
US investor bailed out
“Yes, we are increasingly moving in the direction of a spin-off,” he said regarding the repeatedly discussed spin-off from the parent company – although several attempts to do so have failed so far. He also reiterated his support for state involvement: “The construction of highly complex military submarines in Germany is a key technology that absolutely must remain in the home country.”
For years, thyssenkrupp has been looking for a solution for its shipyard division, which builds submarines and frigates. This is not part of the Group’s core business and it intends to divest the shipyard business as well as the steel division. There are plans to cut 11,000 jobs in the steel segment. At the same time, billionaire Daniel Křetínský is planning to increase his stake in Thyssenkrupp from 20 to 50 percent.
As Burkhard recently announced in an interview with Die Welt (-> to the article), negotiations over the marine division with US financial investor Carlyle broke down last year. According to reports, including from the IG Metall trade union, the German government – represented by Economics Minister Habeck – prevented the takeover. The reason: the ultra-modern submarine technology, which is essential not only for the Bundeswehr but also for international partners such as Norway and Israel, should remain in German hands.
Deutz, Rheinmetall, Lürssen and Fincantieri also interested
However, as thyssenkrupp recently announced, several other companies have recently submitted expressions of interest in a possible partnership with the marine subsidiary TKMS. According to industry insiders, engine manufacturer Deutz is said to have signaled its interest with a non-binding offer at the end of last year. A takeover of TKMS with around 8,000 employees would be a huge step for Deutz – the workforce would almost double compared to the current 5,200 employees. It would also open up a completely new business segment for the company and turn it into one of Germany’s largest defense companies in one fell swoop.
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Also Rheinmetall (-> to the article) and the Bremen-based Lürssen shipyard are also considered potential interested parties. A possible consolidation of the German shipbuilding landscape is thus increasingly taking shape.
“The threat situation in Europe has intensified. We must and will protect the Baltic Sea and the sea lines of communication in the North Atlantic, including the critical maritime infrastructure – from the US coast to our Lithuanian brigade – together with our NATO partners. The procurement of four additional U212CD submarines also plays a central role in this. It is urgently needed to meet the increasing challenges of the coming years.”
Vizeadmiral Jan Christian Kaack, Inspekteur der Marine
In addition to the aforementioned, the German government has also expressed its interest in a takeover. However, according to media reports, the German government is not aiming for a complete acquisition, but would only buy a minority stake and leave the industrial management to a partner. And that could also be Fincantieri. At the end of October, the large Italian shipyard group – a big player in warships – also underlined its interest in TKMS. “We are available for any kind of cooperation,” said Group CEO Pierroberto Folgiero.
