Thyssenkrupp AG will sell its elevator division to a group backed by Advent International and Cinven for 17.2 billion euros ($18.9 billion), making it the biggest private-equity deal in Europe in a decade.
For Thyssenkrupp, the deal is a cash infusion for a company that’s been battered by Germany’s sputtering economy and years of mismanagement. It’s also the first step in a plan set out by Chief Executive Officer Martina Merz to plug holes in the balance sheet and buy time to restructure other unprofitable divisions.
Thyssenkrupp will use cash from the elevator sale to pay down borrowings and fund some of its pension obligations. The company is heavily indebted and in the most recent earnings statement, net debt jumped to 7.1 billion euros.
Chief Executive Officer Martina Merz is now looking at what to do with other businesses at the conglomerate, many of which are unprofitable and span from plant building to submarines and car parts. Thyssenkrupp said it will draw up plans for its other units and present them to the board in May. It’ll then make a decision about what divisions to keep and which ones should be sold or shut down.
The buyers have also agreed to manage the elevators business as a global group and keep the business in Germany. They’ve also committed to certain employment guarantees, Thyssenkrupp said.
