March 27, 2018 / 1:52 PM / a year ago

Cevian warns Thyssenkrupp strategy review may not be radical enough

FRANKFURT/DUESSELDORF (Reuters) - Thyssenkrupp’s (TKAG.DE) upcoming strategic review may not go far and fast enough, major shareholder Cevian said on Tuesday, renewing a call to tackle the German conglomerate’s complex structure to catch up with rivals.

FILE PHOTO - A logo of ThyssenKrupp AG is pictured outside the ThyssenKrupp headquarters in Essen, November 23, 2017. REUTERS/Thilo Schmuelgen

Thyssenkrupp’s management and supervisory boards will hold annual strategy talks in May, with investors expecting new financial targets for the group’s divisions as well as possible asset disposals.

Thyssenkrupp’s materials trading business is widely seen as a potential candidate for a sale, joint venture or listing as this would sharpen Thyssenkrupp’s focus on its industrial goods business.

But for activist investor Cevian, which holds 18 percent in Thyssenkrupp, that would fail to slim down the unwieldy structure of the group, which makes everything from elevators and submarines to car parts and chemical plants.

“The market now fears the outcome of the strategic review could be just a strategic solution for Materials Services and more financial targets and promises for the performance of the divisions,” Lars Foerberg, co-founder of Cevian, said in response to a Reuters request for comment.

“That would be another setback for the company, as it would not fundamentally address what everyone knows is the key issue: the overly complex structure.”

A Thyssenkrupp spokesman said there was a transparent process in place for strategy development that involved the committees in charge of decision-making.

Cevian, Thyssenkrupp’s No.2 shareholder after the Alfried Krupp von Bohlen and Halbach Foundation, has called for more independence for the group’s business areas, arguing its current set-up made it too slow in keeping up with rivals.

“With this strategic review, Thyssenkrupp has a chance to take several steps forward, or fall farther behind due to more half measures,” Foerberg said.

Thyssenkrupp has cut debt, raised profits and simplified its structure over the past few years by severing ties with its steel-making roots, most notably through a planned European joint venture with Tata Steel (TISC.NS).

Since the venture was announced in September, shares in Thyssenkrupp have declined by 16 percent, compared with a 5 percent drop in Germany's benchmark DAX index .GDAXI.

A banker close to the company said a sale of Materials Services would only happen after the joint venture deal between Thyssenkrupp and Tata Steel is done.

Thyssenkrupp still plans a signing of the Tata deal in early 2018, but a significant precondition is still lacking: an agreement between Tata Steel Europe and workers in Britain and the Netherlands.

Additional reporting by Arno Schuetze. Editing by Jane Merriman

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