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Thyssenkrupp: The Fall of German Industrial Titans
Introduction & Episode Roadmap
In the autumn of 2019, executives gathered in Duisburg's industrial heartland to announce a transaction that would have seemed unthinkable just a decade earlier: Germany's storied Thyssenkrupp, heir to over two centuries of industrial might, was selling its elevator divisionâthe company's most profitable businessâfor âŹ17.2 billion. The buyer? A private equity consortium led by Advent International and Cinven.
The elevator unit represented just 20% of group revenues but generated the lion's share of profits. It was, as one analyst put it, "the pearl of Thyssenkrupp." Yet the sale priceâroughly 2.8 times the parent company's entire market capitalization at the timeârevealed just how broken the conglomerate had become. Thyssenkrupp AG sold its elevator division to a group backed by Advent International and Cinven for 17.2 billion euros ($18.9 billion), making it the biggest private-equity deal in Europe in a decade.
This is the story of how two of Germany's most storied industrial dynastiesâspanning 200+ yearsâended up selling their crown jewel just to survive. ThyssenKrupp AG is a German industrial engineering and steel production company. It resulted from the 1999 merger of Thyssen AG and Krupp and has its operational headquarters in Duisburg and Essen. The company says that it is one of the largest steel producers in the world, and it was ranked tenth-largest worldwide by revenue in 2015. It is divided into 670 subsidiaries worldwide.
The Thyssenkrupp saga encompasses nearly every theme that fascinates students of industrial capitalism: founding dynasties that built nations, wartime complicity and post-war reinvention, the hubris of conglomerate strategy, capital allocation disasters that destroyed billions, and activist investors ultimately forcing corporate transformation. The company's largest shareholdersâthe Alfried Krupp von Bohlen und Halbach Foundation with 20.93% and Cevian Capitalâembody this tension between legacy stewardship and modern shareholder capitalism.
Today, Thyssenkrupp trades at a fraction of its historical valuation. Since March 17, 2000, thyssenkrupp AG's market cap has decreased from 13.38B to 5.65B, a decrease of -57.77%. That is a compound annual growth rate of -3.31%. Yet even now, the company remains central to German industryâbuilding submarines for NATO allies, producing steel for European automakers, and developing hydrogen technologies for the green transition. Understanding how Thyssenkrupp arrived at this crossroads requires tracing a narrative that begins in early 19th-century Essen, when a young Friedrich Krupp first experimented with cast steel.
The Founding Dynasties: Krupp & Thyssen Origins (1811â1900)
The Krupp Story: Steel, Ambition, and a 14-Year-Old at the Helm
On November 20, 1811, in the small Ruhr city of Essen, a young merchant named Friedrich Krupp signed papers establishing what would become one of history's most consequential industrial enterprises. Friedrich Krupp (1787-1826), a member of an old Essen merchant family, founded a factory with two partners on 20 November 1811 to manufacture cast steel to English quality standards and the products made from it. Since 1816, he has been producing high-quality cast steel and processing it into tanners' tools, coin dies and roller blanks, by now as the sole owner.
The timing was remarkable. Napoleon's Continental System had cut off English steel imports, creating desperate demand for domestic production. Friedrich Krupp's ambition was to crack the closely guarded secret of English cast steelâa material prized for its consistency and durability. He would spend fifteen years on this quest, pouring his modest fortune into experiments that consumed his health and nearly bankrupted his family.
When Friedrich died in 1826, he left behind a struggling workshop and a 14-year-old son named Alfred. After Friedrich Krupp's death in 1826, his widow Therese Krupp ran the company together with other relatives and her eldest son Alfred, who was 14 years old at the time. What happened next would become one of industrial history's greatest coming-of-age stories. The teenage Alfred, slight of build but fierce of will, gradually took control of operations, perfecting his father's steel formulas through relentless experimentation.
The breakthrough came in 1847, when the expansion of railroads created enormous demand for durable components. Expansion of the railroads increases the demand for durable cast steel, triggering the company's first surge of growth. Supplies include axles, springs, and seamless tires that can withstand increasing speed without cracking. Krupp's reputation for quality steel spread across Europe.
But it was warfare, not peacetime construction, that would transform Krupp into a global power. The Prussian military orders 300 gun barrels, marking the development of the company's second major production segment; shortly after Krupp begins producing complete artillery. Alfred Krupp's cannons would arm Prussian forces in the wars of German unification, earning him the nickname "Cannon King" and transforming Essen into an industrial powerhouse.
Alfred Krupp was an utterly singular figureâparanoid about competitors, obsessive about quality, and paternalistic toward his workers. He built the Villa HĂŒgel, a massive estate overlooking Essen that would house the Krupp family for generations. He also pioneered what we might today call corporate welfare: company housing, pension funds, medical care for workers and their familiesâall designed to forge a loyal, productive workforce bound to the company for life.
The Thyssen Story: A Different Path to Industrial Supremacy
While Alfred Krupp was building his steel empire through military contracts, a different kind of industrialist was emerging in the nearby Ruhr Valley. August Thyssen was born on May 17, 1842, in Eschweiler, into a family already immersed in heavy industry. His father Friedrich had managed the first steel wire rolling mill in the Rhine province before founding a bankâgiving August both technical exposure and financial sophistication.
Unlike the aristocratic pretensions of the Krupps, Thyssen was a pure capitalistâa workaholic obsessed with efficiency, integration, and scale. In 1867, he took his first step into the steel business, and by 1871 had founded Thyssen & Co., an iron strip rolling mill near MĂŒlheim an der Ruhr.
What distinguished Thyssen from his competitors was his relentless pursuit of vertical integration. 1891: August Thyssen becomes the owner of the Gewerkschaft Deutscher Kaiser coal mine in Hamborn near Duisburg. One year earlier, the Thyssen company constructed a steel mill directly adjacent to one of the pits, thus Thyssen grows into an iron and steel mill with its own coal base.
By controlling everything from coal mines to rolling mills to distribution networks, Thyssen could squeeze out costs at every stage of production. This strategy made him phenomenally wealthy and, by 1914, had made his company Germany's largest iron and steel manufacturer.
Myth vs. Reality: The "Self-Made" Industrial Titans
Popular accounts often portray both Krupp and Thyssen as self-made industrialists who built empires from nothing. The reality is more nuanced. Friedrich Krupp came from a prosperous merchant family, and August Thyssen's father was a successful banker who provided crucial startup capital. What distinguished these men wasn't starting from zeroâit was their ability to recognize transformative technologies and invest aggressively during periods of massive economic change.
The Dark Chapter: World Wars, Cartels & Nazi Era (1914â1945)
The First World War and the Unraveling of Empire
As Europe marched toward war in 1914, both Krupp and Thyssen had become indispensable to Germany's military-industrial complex. Krupp's factories churned out the artillery that would devastate the Western Front, while Thyssen's integrated operations supplied the steel that built Germany's war machine. The dynasties had become so intertwined with national power that their fates rose and fell with the German state itself.
For August Thyssen, the war's end brought catastrophe. Having expanded aggressively into foreign markets before 1914, he watched helplessly as his international empire was confiscated by the victorious Allies. His factories in Lorraine were seized, his foreign investments lost. The proud patriarch, now in his seventies, would spend his final years trying to rebuild from the ruins.
The Birth of the Cartels
The 1920s saw German heavy industry consolidate into massive cartelsâa response to overcapacity, reparations burdens, and the need to compete globally. 1934: The company August Thyssen-HĂŒtte AG is spun off the Vereinigte Stahlwerke AG as a so-called operating company. The Vereinigte Stahlwerke (United Steelworks), formed in 1926, merged Thyssen's operations with several other major producers to create the world's largest mining and steel cartel. August's son, Fritz Thyssen, became chairman of the cartel's board.
Fritz Thyssen would make a fateful choice that still haunts the family name. An early financial supporter of Adolf Hitler, he helped fund the Nazi Party's rise to power, believingâcatastrophicallyâthat the National Socialists could restore German industry to greatness while being controlled by establishment conservatives. He was spectacularly wrong.
By 1939, horrified by the invasion of Poland, Fritz Thyssen fled to Switzerlandâa rare act of defiance among German industrialists. 1939: Fritz Thyssen, chairman of the Board of Vereingte Stahlwerke AG, flees to Switzerland after the invasion of Poland. Vichy France would eventually hand him over to the German Reich, and he spent years confined in sanitariums and concentration camps, including Sachsenhausen, Buchenwald, and Dachau.
The Krupp War Crimes
The Krupp company's involvement in Nazi atrocities was far more direct. Krupp took advantage of foreign labourers, slave labourers, prisoners of war, and Jews to compensate for labour shortages. It is estimated that a total of 100,000 people were forced to work by the company. Moreover, it had a workshop near the Auschwitz complex.
Alfried Krupp von Bohlen und Halbach, who took control of the company in 1943, would face justice after the war. Due to the company's involvement in the war, Alfried Krupp von Bohlen und Halbach was then convicted for crimes against humanity and received a sentence of 12 years imprisonment during The United States of America vs. Alfried Krupp, et al., trial of 8 December 1947 â 31 July 1948.
His conviction represented one of the most direct links established between corporate leadership and Nazi war crimes. Alfred Krupp supported the SS and joined the Nazi Party in 1938. His company seized property in countries that were conquered by the Germans and employed the forced labor of POWs and foreign civilians, including in Auschwitz. Krupp was indicted in the separate Krupp trial held in 1948. He was sentenced to twelve years in prison but was released by an American official, John Jay McCloy, in 1951.
This chapter represents the darkest period in either dynasty's historyâa reminder that industrial power, when untethered from ethical constraints, can become complicit in unimaginable crimes.
Post-War Reconstruction & The German Economic Miracle (1945â1990)
Decartelization and Rebirth
The Allied victory in 1945 brought more than just defeatâit brought dissolution. The occupying powers were determined to dismantle the industrial combines that had powered German militarism. The Vereinigte Stahlwerke was liquidated, and from its remains emerged eighteen separate companies. Among them was a reconstituted August Thyssen-HĂŒtte AG, established in Duisburg in 1953.
For Thyssen, the postwar decades were dominated by two extraordinary leaders. During a period of expansion in 1978, Thyssen AG entered the North American automotive industry with the acquisition of Budd's automotive operations, which became the automotive division of Thyssen and operated in North America as Budd Thyssen, later ThyssenKrupp Budd Incorporated. Hans-GĂŒnther Sohl rebuilt the company from 1953 to 1973, re-establishing it as Germany's biggest steelmaker. His successor, Dieter Spethmann, presided over a crucial strategic pivot: diversification away from steel.
The logic was compelling. By the 1970s, competition from low-cost producers in Asia was eroding European steelmakers' margins. Thyssen responded by branching into new areasâmost significantly, elevators and escalators. This diversification would prove prescient, creating the profit engine that would sustain the company for decades.
The Krupp Transformation
For Krupp, the postwar path was more tortured. His property was returned to him in 1953. Alfried Krupp's early release from prison and the restoration of his property remains controversialâa product of Cold War politics and American desire to rebuild West Germany as a bulwark against communism.
Yet Alfried Krupp's final act would reshape the company's future. In spring 1967 Alfried Krupp von Bohlen und Halbach announces the forthcoming conversion of the company into a limited liability company (GmbH), the shares in which are to be held by a charitable foundation. This is made possible by the renunciation of the inheritance by his son Arndt.
His son Arndt, deemed unsuitable to manage the company, renounced his inheritance. The transformation of Krupp into a foundation-owned entity was revolutionaryâan attempt to preserve the company while redirecting its profits to charitable purposes. Upon his death on 30 July 1967 his entire private and corporate assets were transferred to the foundation he established, which took up activities on 1 January 1968. The Alfried Krupp von Bohlen und Halbach Foundation uses the income received from its corporate shareholding exclusively and directly for charitable purposes.
This foundation structure would prove both blessing and curse: providing stability but also limiting the company's ability to raise capital and adapt to changing markets.
The Hostile Takeover & Merger of Equals (1990s)
Gerhard Cromme: The "Job Killer" Who Built a Conglomerate
By the early 1990s, German steel was in crisis. Overcapacity, global competition, and high labor costs were crushing margins. The industry needed consolidation, and a driven young executive named Gerhard Cromme would be its architect.
In 1986 he made his debut in the Krupp Group, initially as chairman of the board of Krupp Stahl AG in Bochum, before becoming chairman of the board of Fried. Krupp AG Hoesch-Krupp was appointed. He had a lasting influence on the takeover of the Ruhr competitor Hoesch in 1992. In 1999, Cromme was one of the initiators of the merger of Krupp and Thyssen to form ThyssenKrupp AG.
Cromme's first major move was the 1992 takeover of Hoesch, another storied German steelmaker. In December 1991 Krupp increased its stake in Hoesch to nearly 51 percent. Hoesch continued to resist being taken over, but by mid-1992 Krupp had won the battle and a merger of the two firms was backdated to January 1 of that year, creating Germany's second largest steel producer.
The Hoesch deal established a pattern: Cromme was willing to be aggressive, endure union protests, and make unpopular cuts to achieve scale. Workers gave him a memorable nicknameâthe "Job Killer."
The Failed Hostile Takeover That Created a Giant
In March 1997, Cromme made his boldest move yet. In March 1997 Krupp launched a DM 13.6 billion ($8 billion) hostile takeover bid of the larger Thyssen. This move led to fierce protests from workers fearful of another round of massive industrial layoffs. When Cromme, dubbed the "job killer" because of those same layoffs, met with protesting workers he was pelted with eggs and tomatoes. With Thyssen's leadership resisting the attempted takeover, Krupp soon abandoned its hostile bid.
The attempted hostile takeover of Thyssen was unprecedented in German corporate culture, where consensus and stakeholder harmony were prized over Anglo-Saxon-style financial engineering. Workers marched, politicians intervened, and Cromme was forced to retreat.
But the very conflict that sank the hostile bid created the foundation for something bigger. In March 1997 Krupp initiated a hostile takeover of Thyssen, which failed, but led to the late 1997 creation of Thyssen Krupp Stahl AG, a flat steel joint venture; additional negotiations then resulted in the March 1999 merger of the two companies to form ThyssenKrupp.
In August 1997 Krupp and Thyssen hold talks on expanding their cooperation. They identify immense potential for strategic development and operating synergies in a full merger. This then takes place on March 17, 1999, when Thyssen Krupp AG is entered in the Commercial Register.
Vogel, Thyssen's chief executive, still had the criminal charges hanging over him, and lost a battle to run the new company. Cromme and Schulz were named co-chief executives of the new company, which organized itself into six main divisions.
The merger created a colossus with DM 60 billion in annual sales and over 180,000 employeesâGermany's fifth-largest industrial company. But it also created a sprawling conglomerate spanning steel, automotive components, elevators, plant engineering, materials services, and shipbuilding. This complexity would prove both strength and weakness in the decades ahead.
Building the Elevator Empire (1999â2007)
From Steel Muscles to Vertical Transportation
Even as the Thyssen-Krupp merger was being finalized, the newly combined company was making a bet on a very different business: elevators. In 1999, Thyssen (one of the companies of the merger to form Thyssenkrupp Elevator) acquired the elevator division of American-based conglomerate Dover Corporation.
The Dover Elevator acquisition for US$1.1 billion immediately vaulted Thyssenkrupp into the top tier of global elevator manufacturers, joining the ranks of Otis, Schindler, and KONE. The strategic logic was compelling: unlike steel, which was cyclical and commoditized, elevator and escalator services generated stable, recurring revenues from maintenance contracts.
Four years later, ThyssenKrupp acquired the Korean-based Dongyang Elevator. This Asian expansion positioned the company to capitalize on urbanization trends in emerging marketsâparticularly the construction boom in China and Southeast Asia.
The Price-Fixing Scandal
But the elevator business also revealed the darker side of oligopolistic competition. The EU Competition Commission reported that the companies had worked to rig bids for procurement contracts, share markets, and fix prices between at least 1995 and 2004. The Commission reported that the companies "did not contest the facts" found by EU regulators. The fines totaled US$1.3 billion.
Thyssenkrupp's share of the fine was âŹ479 millionâa significant hit, but one that the profitable elevator business could absorb. More troubling was what the scandal revealed about corporate culture: a willingness to collude rather than compete, to extract rents from customers rather than innovate.
This period also saw continued diversification. In 1991, ThyssenKrupp acquired German company Hoesch AG. The company expanded into marine systems, acquiring Howaldtswerke-Deutsche Werft in 2005, establishing a presence in the defense shipbuilding market that would become increasingly important decades later.
The Steel Americas Disaster: A $12 Billion Catastrophe (2005â2017)
The Grand Vision
In 2005, Thyssenkrupp's leadership made what would prove to be one of the most catastrophic capital allocation decisions in German corporate history. The plan was elegant in theory: build a state-of-the-art steel slab facility in Brazil to take advantage of low energy costs and proximity to iron ore, then ship those slabs to a new processing plant in Alabama to serve the North American automotive market.
On 11 May 2007, ThyssenKrupp AG invested âŹ3.1 billion (increased to $4.6 billion in 2010) for a project consisting of building new carbon steel and stainless steel processing facilities in Calvert, Alabama about 40 miles north of Mobile. The project, along with a multibillion-dollar greenfield steel-making facility in Brazil, was a cornerstone of ThyssenKrupp's new global expansion strategy into the North American steel markets.
The original budget for the combined Brazil-Alabama project was approximately âŹ4 billion. McKinsey consultants had prepared feasibility studies projecting that each Brazilian steel slab would be $55 cheaper per ton than German productionâa compelling cost advantage that would justify the massive capital outlay.
In September 2006, as Ekkehard Schulz, the former chief executive of Thyssen-Krupp, the first sod was done here, the future seemed glorious. And the numbers that make up the consulting firm McKinsey worked in their feasibility study promised great things. With cheaper energy, lower wages, fewer environmental regulations, each Brazilian steel slab should be $ 55 cheaper per ton of steel produced than in Germany.
The Catastrophe Unfolds
Then came 2008.
The world steel industry peaked in 2007, just as the company spent $12 billion to build the two most modern mills in the world, in Alabama and Brazil. The worldwide Great Recession started in 2008. Heavy cutbacks in construction combined with sharply lowered demand, and prices fell 40%. ThyssenKrupp lost $11 billion on its two new plants, which sold steel below the cost of production.
The timing couldn't have been worse. Thyssenkrupp had committed billions just as the global economy cratered. But the problems went far beyond bad timing. The Brazil plant faced a cascade of issues: cost overruns, construction delays, environmental disputes with local communities, and a strengthening Brazilian real that erased the projected cost advantages.
Chairman Gerhard Cromme described it: "At first we had no luck, then came bad luck." Already there was clear how much of this entrepreneurial venture would come to stand the Group: Instead of the originally planned 1.9 billion euros it cost â until then â a quadruple it.
Cromme's quip would become infamousâa master class in how not to take responsibility for corporate failures.
The long-term global recession that followed the 2008 financial crisis severely undermined ThyssenKrupp's business plan for the Mobile plant. Ongoing fluctuations in the price of steel and the falling value of the Brazilian currency relative to the dollar meant that the plant was never profitable, despite extra capital improvements and the tax abatements.
The Agonizing Exit
The writedowns were staggering. ThyssenKrupp Chief Executive Heinrich Hiesinger vowed to clean up Germany's top steel-maker after recent losses and corruption allegations prompted him to axe half his management board. "I'm not going to talk anything up here, because it is obvious that a great deal has gone wrong in the past," he told journalists. Thyssen also decided not to pay shareholders a dividend for the first time in the company's history.
Hiesinger, who had taken over as CEO in 2011, inherited a disaster he hadn't created. His task was damage controlâfinding buyers for assets that nobody wanted.
They sold it to ArcelorMittal and Nippon Steel the following year for $1.55 billion. In February 2017, it agreed to sell its Brazilian steel business CSA to Ternium for âŹ1.5 billion.
The final accounting was devastating. To date Steel Americas has cost the Group over âŹ12 billion in capital expenditures and start-up losses. Even after deducting the proceeds from the divestment of the plants in the USA and Brazil and Vale's share in the financing, a net loss of around âŹ8 billion remains. The impact is visible on the balance sheet to this day. Redressing it completely will take thyssenkrupp a few more years.
Myth vs. Reality: Bad Luck or Bad Management?
Cromme's "first no luck, then bad luck" framing has been repeated in countless articles about Thyssenkrupp's troubles. But was Steel Americas truly just unlucky? The project displayed classic capital allocation errors: betting heavily on projections during a cyclical peak, underestimating execution risks in unfamiliar markets, and failing to secure offtake agreements that would have provided downside protection. Good capital allocators build in margins of safety precisely because they know forecasts will be wrong. Thyssenkrupp's leadership instead committed the company's balance sheet to the rosiest scenarios.
The Failed Tata Steel Merger & Strategic Chaos (2017â2019)
A European Steel Solution
With Steel Americas finally behind him, CEO Heinrich Hiesinger turned to the persistent problem of European steel. The continent had too many steelmakers chasing too few customers, with Chinese imports adding additional pressure. The solution, Hiesinger believed, was consolidation.
In 2018, thyssenkrupp and Tata Steel, who were the second and third largest producers of flat carbon steel in the European Economic Area ("EEA") respectively, notified the Commission of their intention to establish a JV to combine their flat carbon steel and electrical steel activities in the EEA. Despite the fact that the JV would not create a dominant player within the market, the Commission had serious concerns that the merger would reduce competition and lead to increased steel prices.
The proposed joint venture with India's Tata Steel would have created Europe's second-largest steelmaker, with the scale to compete more effectively against ArcelorMittal and the Asian giants. The two companies in 2019 had sought to tackle over-capacity and other challenges in the steel industry via the joint venture, which would have created Europe's second-largest steelmaker after ArcelorMittal.
The EU Veto
The European Commission has prohibited the creation of a joint venture by Tata Steel and ThyssenKrupp under the EU Merger Regulation. The merger would have reduced competition and increased prices for different types of steel.
The Commission's reasoning was straightforward: fewer competitors meant higher prices for European manufacturers. While the parties offered to divest automotive and packaging plants in Spain, Belgium and the UK to allay the Commission's concerns, the Commission deemed the proposed remedies insufficient. As a result, in June 2019, the Commission blocked the proposed JV. Thyssenkrupp contested the Commission's decision on various grounds, but the GC dismissed thyssenkrupp's arguments in their entirety.
The company appealed, but to no avail. After a lengthy legal battle with the potential to reshape Europe's steel industry, the German industrial conglomerate Thyssenkrupp has failed in its challenge against the European Commission's decision to block its proposed merger with Tata Steel Europe.
Hiesinger's Exit and Strategic Paralysis
The Tata failure broke Hiesinger. On 7 July 2018, the supervisory board agreed to Hiesinger's request to terminate his contract.
Thyssenkrupp boss Heinrich Hiesinger has asked to step down less than a week after sealing a landmark joint venture deal with India's Tata Steel, bowing to growing investor pressure for a more radical restructuring of the group. In the job since 2011, Hiesinger presided over the conglomerate's protracted exit from its volatile steel business.
His departure highlighted the impossible position Thyssenkrupp's leadership faced. By 2017, ThyssenKrupp's shares lost 18 percent during Hiesinger's time in office, underperforming an 87-percent rise in the DAX.
Activist investors Cevian and Elliott had been building stakes and demanding radical action. Elliott Management Corp. and Cevian Capital, two activist investors that control about 20% of the company, endorse Hiesinger's decision to step down and favor bringing in a new chief executive officer who could enact more sweeping changes. "There is now an urgent need and opportunity to address the significant and persistent underperformance of the industrial businesses," Cevian's founding partner Lars Forberg said.
With the Tata deal dead, Thyssenkrupp announced in 2018 that it would split into two companiesâThyssenKrupp Industrials and ThyssenKrupp Materials. By May 2019, this plan too was abandoned amid deteriorating markets and collapsing share prices.
Selling the Crown Jewels: The Elevator Sale (2019â2020)
The Defining Moment of Modern Thyssenkrupp
By 2019, Thyssenkrupp's strategic options had narrowed to a single path: sell the elevator business. Once a symbol for Germany's industrial strength, Thyssenkrupp is on the brink of survival having been relegated from the blue-chip Dax index last year. The cumulative effect of downturns in Chinese and German manufacturing economies, weak demand for European steel, rising pension costs alongside mismanagement has presented significant downside risk for the steel-to-submarine conglomerate.
The sale is a turning point for the German industrial giant that has seen its core steel business report a loss in Q1'20 and will be Europe's largest private equity buyout since 2007, when KKR took Alliance Boots private. Thyssenkrupp is selling its elevator unit to pay down âŹ7.1 bn of net debt and reduce structural costs which include pension liabilities (a total of âŹ16 bn).
The Auction
The sale process attracted the industry's biggest players. A first round auction saw a âŹ17 bn offer by a consortium comprising of Finnish competitor Kone and CVC Capital Partners, outbid competitors in terms of offer value. However, this was withdrawn on grounds of antitrust and legal concerns. The consortium including Advent International, Cinven, Abu Dhabi Investment Authority and RAG Foundation ultimately outbid other private-equity consortiums.
The bidding group prevailed against a rival consortium comprising Blackstone Group Inc, Carlyle Group Inc and the Canada Pension Plan Investment Board, which sources said submitted a lower offer. The deal, Europe's biggest buyout since 2007, values the division at roughly 18 times core earnings.
The consortium's offer stands at 17.3x EBITDA, and 2.2x revenue of âŹ7.96 bn. Furthermore, the deal will be funded by a debt package composed of high-yield bonds and leveraged loans equating to 6.9x adjusted earnings, which is the acceptable upper limit of leverage going into a buyout transaction. For Advent and Cinven, the buyout presents a strong strategic rationale.
"With the sale, we are paving the way for Thyssenkrupp to become successful. Not only have we obtained a very good selling price, we will also be able to complete the transaction quickly," Thyssenkrupp Chief Executive Martina Merz said.
The Aftermath
thyssenkrupp has successfully completed the sale of its elevator business, marking a further important milestone in the transformation of the company. The transaction closed today after all the responsible authorities had approved the sale to a bidding consortium led by Advent International and Cinven. thyssenkrupp signed an agreement with the consortium on the purchase of the elevator business on February 27, 2020.
The proceeds allowed Thyssenkrupp to avoid insolvency and begin rebuilding its balance sheet. The transaction will result directly in a substantial reduction in debt to a net cash position and a significant increase in equity. The group's balance sheet ratios will thus improve significantly. At the same time, thyssenkrupp will be able to considerably reduce past balance sheet burdens.
But the sale also revealed the fundamental weakness of Thyssenkrupp's conglomerate model. The elevator business had been subsidizing the struggling steel and automotive operations for years. Without it, the remaining businesses would need to stand on their ownâor find new owners willing to invest in their transformation.
The Lopez Era: Transformation and TKMS Spinoff (2023â2025)
A New CEO, A New Strategy
In June 2023, Thyssenkrupp appointed Miguel Ăngel LĂłpez Borrego as CEOâan outsider tasked with executing what his predecessors had attempted but failed to achieve. Mr. LĂłpez Borrego started his career as controller for VDO AG in 1987, becoming Chief Financial Officer at VDO Instrumentos S.A. in Rubi Spain in 1991. From 2001 to 2022 he worked at Siemens AG in various positions and at various subsidiaries. In 2022 he became Chief Executive Officer at Norma Group SE, Maintal and in June 2023 he joined thyssenkrupp AG as Chief Executive Officer.
With Miguel Ăngel LĂłpez Borrego, we have attracted an internationally experienced manager who has far-reaching industry and financial expertise to thyssenkrupp. His experience and knowledge are exactly what the company needs right now to tackle the challenges that it faces. With his leadership, we will be able to systematically advance the change process that we have already initiated.
LĂłpez articulated a vision that would have seemed radical just years earlier: transforming Thyssenkrupp from a traditional conglomerate into a strategic holding company with autonomous business units. With the strategic transformation of thyssenkrupp, we are resolutely continuing on our chosen course. The future independence of our current segments â with the advantage of their own access to capital markets and the possibility of third-party investment â will increase their entrepreneurial flexibility, strengthen their investment plans and earnings responsibility, and improve transparency for investors.
And the fact is, the steel business is making losses.
The Steel Partnership with KĆetĂnskĂœ
One of LĂłpez's first major moves was bringing in an outside investor for the steel business. thyssenkrupp AG and EP Corporate Group a.s. (consecutive EPCG) today agreed on EPCG's acquisition of a stake in thyssenkrupp's steel business. EPCG will acquire 20 percent of thyssenkrupp' steel business.
The goal is to form an equal partnership within a 50/50 joint venture. There have long been speculations about KĆetĂnskĂœ entering the thyssenkrupp steel business.
With the now completed closing, EPCG acquires a 20 percent stake in thyssenkrupp's steel business in accordance with the agreement dated April 26, 2024. This marks a further important step forward in the process of transforming thyssenkrupp Steel Europe towards a full entrepreneurial independence. "The successful closing of EPCG's 20% stake in thyssenkrupp's steel business is an important step towards the independence of the steel business and a resilient, cost-efficient and climate-friendly steel production," said Miguel LĂłpez.
The TKMS Triumph
The defining success of the LĂłpez era has been the Marine Systems spinoff. TKMS, the German warship manufacturer which has spun out from parent group Thyssenkrupp, plans to capitalize on the expected surge in Europe's defense spend with "prudent, margin-oriented growth" after debuting on Frankfurt's stock exchange. The initial public offering saw TKMS launch at around 60 euros ($70) per share â giving it a market value of around 3.8 billion euros ($4.4 billion) â drawing strong demand from investors.
Die thyssenkrupp-Tochter thyssenkrupp Marine Systems AG, kurz TKMS, hat ihren Börsengang am 20. Oktober 2025 erfolgreich abgeschlossen. Die Aktie eröffnete bei 60 Euro - Analysten hatten im Vorfeld mit einem Erstkurs von rund 36 Euro gerechnet.
As the global leader in non-nuclear submarines with 8,300 employees across Kiel and Wismar shipyards, TKMS holds record orders exceeding âŹ18 billion â a 50% surge since September 2023.
ThyssenKrupp selbst behĂ€lt die Mehrheit (rund 51 %) â 49 % gehen an die bestehenden AktionĂ€re und sind somit handelbar. TKMS ist Deutschlands gröĂter Marineschiffbauer und spezialisiert auf nicht-nukleare U-Boote, Fregatten, Korvetten und maritime Systemlösungen.
The Nucera Story: A Hydrogen Future
Before TKMS, LĂłpez had already demonstrated the spinoff playbook with the hydrogen business. In the course of the IPO, a total of over 30 million shares were placed; of these, over 26 million were new shares. The offer price was set at âŹ20 per share. The market capitalization for thyssenkrupp nucera is therefore around âŹ2.53 billion. The gross proceeds accruing to thyssenkrupp nucera from the sale of the new shares amount to around âŹ526 million.
thyssenkrupp nucera has well-filled order books with an order backlog worth around âŹ1.4 billion. The contracted projects have a combined installed electrolysis capacity of more than 3 gigawatts (GW).
The goal is to form a focused, agile, and realigned industrial group: thyssenkrupp AG as the strategic holding company with strong, independent businesses. At today's extraordinary meeting, the Supervisory Board also agreed to extend the contract of the CEO of thyssenkrupp AG, Miguel Ăngel LĂłpez Borrego, by five years until May 31, 2031.
Current Operations and Financial Position (2024-2025)
Business Performance
The company's fiscal year 2024/2025 has seen continued challenges amid a difficult macroeconomic environment. In the 3rd quarter of fiscal year 2024/2025, thyssenkrupp saw solid business performance in a persistently challenging market environment.
Group sales were âŹ8.2 billion (prior year: âŹ9.0 billion), mainly due to declining price and demand effects. Despite the decrease in sales, the group kept adjusted EBIT stable, even posting a small increase to âŹ155 million from the prior-year figure of âŹ149 million.
In light of the persistently challenging market environment, thyssenkrupp has made demand- and price-induced adjustments to the sales forecasts for Automotive Technology, Materials Services and Steel Europe. For the 2024/2025 fiscal year, the group is now assuming sales in a range of (7) percent to (5) percent. As a consequence, thyssenkrupp has also narrowed the forecast for adjusted EBIT and now predicts a figure at the lower end of the range between âŹ600 million and âŹ1,000 million.
The Steel Restructuring
Steel Europe faces perhaps the most challenging restructuring. The key points paper from thyssenkrupp Steel envisages reducing production capacities from the current 11.5 million metric tons to a future target dispatch level of 8.7 to 9 million metric tons in line with market conditions, thus adapting capacities to future market expectations.
The implementation of the key issues paper that has now been presented will be accompanied by a significant reduction in jobs and further personnel-related cost reductions. For example, the planned adjustment of the Group-wide production network and a significant streamlining of administration will result in the loss of around 5,000 jobs by 2030. In addition, a further tranche of about 6,000 jobs is to be transferred to external service providers or shed through the sale of business activities.
Marine Systems: The Bright Spot
Order intake between April and June increased to âŹ10.1 billion. This represents a year-on-year increase of 21 percent, primarily driven by strong new business at Marine Systems.
The Marine Systems segment posted substantial order growth, mainly due to the addition of two submarines in an extension of the order from Singapore. Moreover, Marine Systems concluded one of the largest service orders in the company's history for the German Navy's six submarines.
On the basis of the orders received in the current fiscal year, the business already has an order backlog of âŹ18.5 billion as of June 30, 2025. The rising demand anticipated in the core businesses of TKMS in the years ahead and long-term geostrategic developments will provide the company with additional growth opportunities.
Financial Health
As of June 30, 2025, net financial assets were âŹ3.7 billion (March 31, 2025: âŹ4.0 billion). With cash and cash equivalents and undrawn committed credit lines totaling âŹ5.7 billion, the group still has a very good liquidity position.
Investment Considerations: Bull & Bear Cases
The Bull Case
Marine Systems as a Hidden Gem: The TKMS spinoff has crystallized value that was obscured within the conglomerate. The company has a sizable order backlog stretching towards 2040 as European countries look to ramp up their defense capabilities in the coming years. Europe's commitment to increased defense spending provides a secular tailwind that could drive years of growth.
Hydrogen Optionality: Thyssenkrupp nucera represents genuine optionality on the hydrogen economy. thyssenkrupp nucera is one of the world's leading suppliers of electrolysis plants for the production of green hydrogen. If the green hydrogen market develops as bulls project, nucera could become significantly more valuable.
Steel Transformation Underway: The partnership with KĆetĂnskĂœ provides both capital and energy expertise needed for the green steel transition. The âŹ3.5 billion direct reduction plant in Duisburg represents a bet on hydrogen-based steelmaking that could differentiate Thyssenkrupp from competitors.
Sum-of-Parts Discount: The conglomerate structure has historically traded at a discount. As LĂłpez executes the holding company transformation, that discount could narrow.
The Bear Case
Steel Remains a Value Trap: European steel fundamentals remain challenged. Thyssenkrupp's steelmaking unit has been hit by fierce competition from Asia, while high energy prices and lower demand in Europe squeeze the steelmaking businesses' prospects. The green steel transition requires massive capital investment with uncertain returns.
Execution Risk: Thyssenkrupp has a long history of strategic announcements that never materialized. The split into two companies was announced and cancelled. Multiple CEO transitions have disrupted continuity. Investors may rightfully question whether the current transformation will succeed where others failed.
Pension and Legacy Liabilities: Thyssenkrupp carries significant pension liabilities that remain a drag on cash flows and constrain strategic flexibility.
Market Saturation: The elevator business sale revealed that Thyssenkrupp's most valuable asset was its least industrial. The remaining businesses face more competitive, lower-margin markets.
Porter's Five Forces Analysis
Industry Rivalry: Intense in steel (ArcelorMittal, SSAB, global Chinese producers), moderate in marine (fewer competitors but significant political factors), moderate in hydrogen (growing but still early-stage)
Threat of New Entrants: Low in marine (high barriers, long qualification periods, government relationships), moderate in steel (new capacity coming from emerging markets), high in hydrogen (many well-funded competitors entering)
Supplier Power: Moderate for most businesses; energy costs are critical for steel and subject to significant volatility
Buyer Power: High in steel (automotive OEMs are powerful customers), lower in marine (government customers but limited alternatives)
Substitute Threats: Low for marine systems; moderate for steel (aluminum, carbon fiber); low for green hydrogen in industrial applications where electrification isn't feasible
Hamilton Helmer's 7 Powers Framework
Scale Economies: Present in steel but offset by overcapacity; TKMS benefits from fixed-cost leverage over large defense contracts
Network Effects: Minimal across businesses
Counter-Positioning: Thyssenkrupp nucera's alkaline water electrolysis technology represents potential counter-positioning versus incumbent industrial gas companies using steam methane reforming
Switching Costs: High for marine systems customers (long qualification and integration periods); moderate for steel
Branding: Minimal pricing power from brand in current businesses
Cornered Resource: TKMS's submarine design expertise and German government relationships represent a cornered resource; decades of electrolyzer experience at nucera
Process Power: Potential in steel if green transformation is executed successfully; TKMS has demonstrated process power in submarine construction
Key Performance Indicators to Watch
For investors monitoring Thyssenkrupp's transformation, three KPIs merit particular attention:
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TKMS Order Backlog and Conversion: The âŹ18.5 billion backlog represents years of locked-in revenue. Investors should track: (a) new order intake to assess demand sustainability; (b) revenue recognition rates to evaluate execution; and (c) margin trends to ensure profitable growth.
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Steel Europe Cash Flow Before Restructuring: Given the massive restructuring underway (11,000 job cuts), tracking underlying operational cash generationâseparate from restructuring costsâwill indicate whether the business can become self-sustaining.
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Thyssenkrupp nucera Order Intake and Contracted Capacity: The hydrogen business's trajectory depends on converting the pipeline of potential projects into firm orders. Tracking contracted gigawatts of electrolyzer capacity provides the best leading indicator of future revenue.
Conclusion: Two Centuries and Still Transforming
The Thyssenkrupp story is, in many ways, the story of German industry itselfâits triumphs, its tragedies, and its ongoing reinvention. From Friedrich Krupp's cast steel experiments to August Thyssen's integrated empire, from the horrors of wartime complicity to post-war reconstruction, from the conglomerate ambitions of the 1990s to the brutal capital allocation mistakes of Steel Americas, the company has repeatedly demonstrated both remarkable resilience and a troubling capacity for self-inflicted wounds.
Today, under Miguel LĂłpez's leadership, Thyssenkrupp is attempting what may be its most fundamental transformation yet: shedding the conglomerate model that defined it for decades and reimagining itself as a holding company with autonomous, publicly traded subsidiaries. The TKMS spinoff's success suggests this model can work. Whether it can be replicated across the struggling steel and automotive businesses remains the central question for investors.
The Alfried Krupp Foundation, with 20.93% remaining the largest shareholder, embodies the tension at Thyssenkrupp's heart. He stipulated in his will that "the company is to be transformed, via a foundation, into a corporation, which shall be an expression of the tradition of the House of Krupp for commitment to common welfare." That commitment to common welfareâinterpreted as preserving jobs, maintaining industrial capacity in the Ruhr Valley, and supporting German manufacturingâhas sometimes conflicted with the financial imperatives that modern capital markets demand.
Perhaps the most striking aspect of Thyssenkrupp's current moment is how much it echoes the past. Two centuries ago, Friedrich Krupp bet everything on a new technologyâcast steelâthat would transform industry. Today, his corporate descendants are betting on green hydrogen and next-generation naval systems. Whether these bets pay off will determine whether the Krupp and Thyssen names remain synonymous with German industrial mightâor become historical curiosities, remembered for what was rather than what is.
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