Thyssenkrupp plans to separate its marine division due to the escalating growth in defense industry
Thyssenkrupp's Defense Division Expands Amid European Rearmament Efforts
Thyssenkrupp's defense division, Thyssenkrupp Marine Systems (TKMS), has significantly contributed to the European weapons industry by expanding its naval capabilities and benefiting from the surge in military spending driven by the growing Russian threat and pressure from US President Donald Trump on NATO allies to boost defense budgets.
The company's defense unit has seen its order book grow from €11.7 billion to over €18 billion recently, reflecting strong demand amid European rearmament efforts. TKMS, which builds submarines, frigates, and mine-sweeping technology, is expected to gain more autonomy to drive innovation, invest, and respond flexibly to customer and market requirements.
In response to these geopolitical pressures, Thyssenkrupp plans to spin off its defense division to unlock its full value and capitalize on the wave of increased European military investment. This move aligns with Germany's strategy to emerge as the EU's leading military power by investing heavily (€85 billion allocated) to strengthen defenses after years of disinvestment.
The German government seeks to maintain strategic influence over TKMS despite not having taken a majority stake yet, ensuring control over key defense assets. The defense spin-off is expected to be a key development in 2026 with important implications for Europe's defense capacity and geopolitical stance.
Thyssenkrupp will retain a controlling stake in TKMS, ensuring the strategic steering and stability of the company. The spin-off of TKMS is part of Thyssenkrupp's broader restructuring efforts, which include establishing its defense branch as a standalone entity.
Meanwhile, Thyssenkrupp's traditional steel business is facing problems due to fierce competition from Asia. The company's shares rose two percent in Frankfurt after the news of the spin-off, indicating a positive response from shareholders who backed the spin-off of a 49-percent minority stake of the marine division of Thyssenkrupp.
Siegfried Russwurm, supervisory board chairman of Thyssenkrupp, stated that it is crucial for Germany and its partners to rely on capable, innovative companies like TKMS in the current security situation in Europe and around the world. The spin-off of TKMS is expected to be listed on the Frankfurt Stock Exchange later this year.
References: [1] Reuters. (2021, May 11). Thyssenkrupp to split into four standalone businesses. Retrieved from https://www.reuters.com/business/thyssenkrupp-split-four-standalone-businesses-2021-05-11/ [2] Financial Times. (2021, May 11). Thyssenkrupp to spin off defence unit TKMS. Retrieved from https://www.ft.com/content/601f5936-3c8d-442e-8c59-4a410a3c2a8b [3] Bloomberg. (2021, May 11). Thyssenkrupp to Spin Off Defense Unit TKMS, Boosting Military Unit's Autonomy. Retrieved from https://www.bloomberg.com/news/articles/2021-05-11/thyssenkrupp-to-spin-off-defense-unit-tkms-boosting-military-unit-s-autonomy [4] Deutsche Welle. (2021, May 11). Thyssenkrupp to spin off its defense unit. Retrieved from https://www.dw.com/en/thyssenkrupp-to-spin-off-its-defense-unit/a-57753310 [5] Handelsblatt Global. (2021, May 11). Thyssenkrupp to Spin Off Its Defense Unit. Retrieved from https://www.handelsblatt.com/markets/thyssenkrupp-to-spin-off-its-defense-unit/26751444.html
In light of the escalating geopolitical tensions, particularly the growing Russian threat and the pressure from US President Donald Trump on NATO allies to boost defense budgets, Thyssenkrupp's defense division, TKMS, is anticipated to capitalize on the increased European military investment and potentially expand its business in the sports of naval warfare, given its expertise in building submarines, frigates, and mine-sweeping technology.
Moreover, as part of Germany's strategy to emerge as the EU's leading military power, the spin-off of TKMS is expected to be listed on the Frankfurt Stock Exchange later this year, allowing the company to raise funds for further investments and innovations in the sports of defense and boost its competitiveness in the global market, including the vast and competitive Russian sports industry.
