German industrial conglomerate Thyssenkrupp is exploring options to sell, spin off, or publicly list its materials trading division potentially as early as this fall, according to three sources with knowledge of the discussions.
The potential divestment of Thyssenkrupp Materials Services (MX) represents another major restructuring move by CEO Miguel Lopez, who has already overseen the separation of the company’s defense operations while continuing negotiations to sell the steel manufacturing unit.
The materials division generated 11.4 billion euros ($13.5 billion) in revenue last year and accounts for more than one-third of Thyssenkrupp’s total sales. Industry insiders suggest the unit could be separated through a public offering as soon as this autumn.
Following news of the potential sale, Thyssenkrupp’s stock price jumped as much as 4.2% and was trading 3.6% higher by midday Monday.
In response to inquiries, Thyssenkrupp confirmed that MX was “well on track” to become ready for capital markets. The company had previously indicated it was pursuing an independent future for the business unit.
Sources indicate that any successful divestment depends on the division showing stronger performance in the second fiscal quarter ending in March. The unit handles both metals and raw materials trading along with warehousing operations.
Company executives are also exploring restructuring MX under a KGaA legal framework, which would allow Thyssenkrupp to maintain controlling interest even after selling a majority stake, according to the sources.
The discussions remain fluid with no final decisions reached, and specifics could change as talks progress.
“We are confident that Materials Services can be successfully brought to the capital market – even in a challenging environment. As with any planned transaction, the exact timing will depend on market conditions,” the company stated.
The materials division identifies the United States as its primary market, where it currently ranks fourth among steel service providers behind Reliance, the merged Ryerson/Olympic Steel entity, and Kloeckner & Co. The U.S. market is experiencing significant consolidation, with Worthington Steel recently announcing plans to acquire Kloeckner for $2.4 billion.
“We see potential for consolidation in the market, but we do not view this potential as a risk, but rather as an opportunity for Materials Services,” Thyssenkrupp said.
Industry analysts estimate that based on recent market valuations, including Worthington’s offer for Kloeckner at 8.5 times core earnings, Thyssenkrupp Materials Services could command approximately 2 billion euros in a sale.
