The steel and technology group Thyssenkrupp changes management in difficult times: The controversial CEO Martina Merz asked the supervisory board to terminate her contract, which ran until 2028, the Essen-based MDax group surprisingly announced on Monday. That went down badly with investors; the share lost 13 percent in value in the afternoon. Miguel Ángel López Borrego is scheduled to take over as his successor in June. The Spaniard, who was born in Germany, has been head of the Hessian automotive and industrial supplier Norma since January, although he only holds this position on a transitional basis should exercise, until Norma found a permanent solution. Appropriately, this cleaning service will no longer be needed from June onwards. The 58-year-old business graduate previously managed Siemens’ business in Spain.
Merz has been leading the company with its 96,000 employees since autumn 2019, having previously headed the supervisory board. The engineer – the first woman to head the company – wants to rebuild the conglomerate into a group of largely independent companies; ThyssenKrupp’s Essen headquarters should only be a holding company. In addition, the 60-year-old is looking for buyers or partners for important sectors, such as the steel business. But this course is controversial – and Merz made much slower progress than she would have liked.
At a special meeting of the supervisory board a good three weeks ago, there was sharp criticism from employee representatives: There is no progress and Merz must “finally” present a new overall concept, according to a protocol of the meeting that IG Metall sent to its works councils. Some employee representatives and also parts of the management are particularly skeptical about the plan to separate from the steel division. Instead, these critics want to make steel the center of ThyssenKrupp and dump other businesses. The company is the largest steel manufacturer in Germany.
In Merz’ environment, however, it is emphasized that the withdrawal is not the result of these attacks, but is related to their life plans. The Chairman of the Supervisory Board Siegfried Russwurm – who is also President of the Federation of German Industries – says about the changethe company will “continue the path of transformation on the basis of the strategic lines developed” with the new boss: That doesn’t sound as if López Borrego should make a change in strategy.
The deputy chairman of the supervisory board and IG Metall board member, Jürgen Kerner, warns that the new company boss will “unfortunately not have much time to familiarize himself with it: the problems are on the table, time is short.” The employee representatives expected that “under his leadership the Executive Board would quickly develop solution concepts”.
The debts threatened their livelihood
When Merz took over as CEO, the debt was so high that it threatened the existence of the group. The boss therefore quickly sold the elevator business for 17 billion euros in order to reduce the oppressive debt burden. However, Merz wants to give up other areas or at least look for partners because the group alone does not have enough money to be able to invest enough in growth everywhere. Recently, Merz was therefore not only looking for buyers for the steel division, but also for the Marine Systems armaments business, the world market leader for non-nuclear submarines.
Merz also wants to list a minority stake in the hydrogen subsidiary Nucera. The company builds electrolysers, i.e. systems that use electricity to produce hydrogen – a future market, because climate-friendly hydrogen is to replace natural gas in industry and power plants in the future.
But because of the Covid crisis and the war, the stock market environment has been too bad so far. And when it comes to steel, courting buyers is also tough. Merz is also not the first to want to part with the division: At the turn of the millennium, the then CEO Gerhard Cromme wanted to take the business public, but this did not succeed. Later, mergers with rivals Tata and Liberty Steel failed. In the most recent attempt, financial investors or foreign competitors such as CSN from Brazil are considered interested parties.
Merz also brought up the possibility that large hydrogen producers, for example from the Arab region, could participate. After all, in a few years ThyssenKrupp’s Duisburg steelworks will need huge amounts of hydrogen in order to be able to produce steel in a climate-friendly manner and without coke and coal. In its farewell message, Merz now only announces that Thyssenkrupp has “started promising talks with possible partners” for the division.
The major shareholder deeply regrets the farewell
The group’s largest shareholder is the “Alfried Krupp von Bohlen und Halbach Foundation” in Essen. The foundation holds 21 percent of the shares and finances its sponsorship activities with dividends. The foundation announces that it “extremely” regrets the decision of the CEO. Chair of the Board of Trustees Ursula Gather has always supported Merz’ course. “I am still convinced that Thyssenkrupp can remain competitive and pay dividends in the long term with the strategic course it has taken,” says the retired mathematics professor and former rector of the Technical University of Dortmund.
In a message to employees, Merz writes that “after a disruptive phase, it is now important to successfully secure the restructuring of Thyssenkrupp in the long term”. She wants to pave the way for that.
Chairman of the Supervisory Board Russwurm praises her successor as an experienced expert in takeovers and mergers. López Borrego will be able to use this expertise when he works through his predecessor’s sales list.