The thyssenkrupp subsidiary TKMS, Germany’s largest naval shipbuilder, is making its stock market debut this Monday. This is how the stock performs on its first day of trading.
• thyssenkrupp takes marine division public
• The initial price of the TKMS share was 60 euros
• Favorable environment for defense companies
TKMS ventures onto the trading floor
As part of its restructuring, thyssenkrupp spun off the TKMS (thyssenkrupp Marine Systems) division. However, of the total 63.52 million TKMS shares, the MDAX group retains a majority of 51 percent and only the remaining 49 percent go into the depot of the thyssenkrupp shareholders. It was allocated on October 17th.
This Monday, the Essen parent company is taking its subsidiary public on the stock exchange. The shares are traded in the Prime Standard of the Frankfurt Stock Exchange. The initial price of the TKMS share was 60 euros and was therefore above expectations. Analysts had previously calculated a starting price of around 36 euros per share. In XETRA trading, the share ultimately rose by 35.17 percent to 81.10 euros. At the daily high it went northwards to up to 107 euros.
TKMS for a day in the MDAX
The shares of the newcomer to the stock exchange will be included in the MDAX for one day this Monday, October 20th. The index operator Stoxx – a subsidiary of Deutsche Börse – wants to ensure that investors can understand the index. After the MDAX is calculated for this one day based on 51 companies, the TKMS share is then removed from the index again at the close of XETRA trading.
Good time
The timing for the TKMS IPO is good because the company is benefiting enormously from the historically high defense spending and currently has a considerable order backlog of around 18 billion euros. According to its own information, TKMS is the world market leader for non-nuclear submarines, but also builds other warships such as frigates and corvettes as well as sonars.
Because of the security-related importance of TKMS, according to “Handelsblatt”, the federal government has secured extensive rights and influence over the important arms company: For example, if five percent or more is to be sold by a security-relevant company, the federal government has a right of first refusal and for sales of 25 percent or more, the federal government has a veto right. In addition, the federal government has secured a seat on the future ten-member TKMS supervisory board.
Open questions
However, some market observers view the spin-off with skepticism. With concerns about thyssenkrupp, some investors fear a shift in value in favor of the new entity. On the other hand, with regard to TKMS, the question is asked whether thyssenkrupp really intends to remain a strategic majority shareholder in the long term.
Unknown drone flights
In addition, TKMS recently hit the headlines because its submarine shipyard in Kiel was overflown by unknown drones at the end of September. The incident was confirmed by a company spokesman to the “Westdeutsche Allgemeine Zeitung”. It was said that there was no information available about the origin of the drones. This raises serious questions about security precautions at one of Germany’s most sensitive military production sites.
At times more valuable than thyssenkrupp
On Monday, the company value of TKMS temporarily exceeded that of the thyssenkrupp group: While the value of all Thyssenkrupp shares temporarily shrank below the 6 billion mark due to the spin-off, TKMS was valued at its peak at 6.2 billion euros. As part of the spin-off, Thyssenkrupp shareholders automatically received one share in TKMS for every 20 of their shares. Combining both stocks mathematically, Thyssenkrupp shareholders now have around 14 percent plus in their portfolio.
Editorial staff at finanzen.net with material from dpa-AFX
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