FRANKFURT/BERLIN (Reuters) - German brake systems maker Knorr-Bremse plans to list on the Frankfurt stock exchange this year, the company said on Monday, in what is expected to be Germany’s second-largest listing this year after Siemens Healthineers (SHLG.DE).
The family owners are seeking to sell what Knorr said in a statement would be a meaningful minority stake in the supplier of brakes for trucks and trains.
No new shares will be offered to investors in the initial public offering, which is expected to be completed in the fourth quarter of this year, the company said.
People close to the matter said that they expect Knorr-Bremse to be valued at about 12 billion euros ($13.9 billion), with roughly a quarter of the shares to be offered, which would make it a candidate for inclusion in Germany’s midcap MDAX index .MDAXI.
For majority-owner Heinz Hermann Thiele, 77, and his family, the IPO is also part of succession planning as he pushes for professional investors to have a voice in the company’s strategy.
Last week, European online furniture retailer Westwing said it planned to raise about 120 million euros in a Frankfurt listing, the latest start-up backed by German investor Rocket Internet (RKET.DE) to go public.
Other IPOs expected this autumn include that of chip factory builder Exyte.
According to people close to the matter, Thiele had also been in discussions with peers such as ZF Friedrichshafen [ZFF.UL], Continental (CONG.DE) and Bosch [ROBG.UL] on a potential buyout, but the plans did not gain traction as Thiele was not interested in ceding control.
The listing would enable Knorr Bremse to pay for future acquisitions with shares, but the company is currently only targeting tuck-in cash deals worth up to 200 million each, people close to the matter said.
Knorr is planning to pay out 40-50 percent of its earnings and to keep net debt at below its annual earnings before interest, tax, depreciation and amortization, they added.
The company has said it expects group sales to increase to between 6.4 billion and 6.6 billion euros this year and EBITDA to reach between 1.1 billion and 1.3 billion euros.
Knorr Bremse, which employs 30,000 people globally, has a market share of about 50 percent in rail brakes, with its closest peer Wabtec (WAB.N) having 15 percent. It also supplies 42 percent of global truck brakes, while rival Wabco (WBC.N) has 34 percent.
Wabco and Wabtec trade at 9.4 and 17 times their expected core earnings respectively, although investors may also look at European high-margin industrials such as Atlas Copco (ATCOa.ST), Alfa Laval (ALFA.ST) or Schindler (SCHP.S) when analysing a value for Knorr-Bremse shares.
Knorr Bremse supplies the world’s leading rail and truck makers with brakes, door systems, air conditioning, driver assistance technology and steering systems. It has grown at an average of 10 percent annually for almost 30 years, a third of which it achieved through acquisitions.
Its largest customer is China’s CRRC (601766.SS), which accounts for 12 percent of its rail brakes sales.
Additional reporting by Alexander Huebner and Maria Sheahan; editing by Thomas Seythal and Emelia Sithole-Matarise