Duesseldorf/Frankfurt: Thyssenkrupp will take its time to replace chief executive Heinrich Hiesinger after his resignation, dampening hopes of a speedy restructuring or even a break-up of the German industrial group.
Hiesinger’s resignation came less than a week after he sealed a landmark joint venture deal with Tata Steel, the culmination of two years of negotiations that in the end came too late to placate investors hungry for change.
Activist shareholders Cevian and Elliott had criticized Thyssenkrupp’s performance under Hiesinger, with shares down 28% since he took office in January 2011. There have been calls to break up the company that spans submarines, elevators and car parts.
The board did not appoint an interim CEO, but said it had asked the remaining executives—Guido Kerkhoff, Oliver Burkhard and Donatus Kaufmann—to lead the company for now.
“In this difficult situation it is most important now for the company to remain on course," the supervisory board’s chairman Ulrich Lehner said in a statement.
The chief executive had been set to present a revamped strategy for the group, which was forged by the merger of two German steel groups founded in the 19th century. Such a presentation now looks likely to be delayed.
“The succession to Dr Heinrich Hiesinger as chief executive will follow in a structured process," Thyssenkrupp said, without providing details on possible candidates or a timeline.
Thyssenkrupp’s stock jumped as much as 6.6% to the top of the pan-European STOXX Europe 600 index on Friday before giving up some of its gains to trade 1.7% higher by 1415 GMT.
Hiesinger, 58, was brought in to turn around Thyssenkrupp seven years ago after it lost billions of euros in an ill-fated venture in the Americas that had forced his predecessor Ekkehard Schulz to step down.
The former Siemens executive vowed to fix the “disaster" at the group, axing half his management board amid losses and corruption allegations.
He presided over Thyssenkrupp’s protracted exit from its volatile steel business, whose roots go back more than 200 years and provided the company’s backbone for many generations.
But his shareholder backing dwindled during his quest to simplify the group’s structure while still keeping it intact.
“We welcome the CEO’s resignation as this could be a sign of a change of strategy, a move toward the split of the company’s assets and the end of the conglomerate discount," said Frederic Guignard, European equities fund manager at Aviva Investors, a top-30 investor in Thyssenkrupp.
Breaking up conglomerates is tougher in Germany than, for example, in the United States, mainly because of the power of labour unions on German company boards.
“Now there is an opportunity to develop a new strategy, to advance restructuring and to reposition the group," said Ingo Speich, fund manager at Union Investment, which holds about $28.5 million worth of Thyssenkrupp stock.
“A successor should therefore add a new perspective rather than hold on to the existing strategy," he added.
The resignation was the fourth by a German blue-chip company’s CEO in as many months, after the chiefs of Deutsche Bank, Volkswagen and Beiersdorf.
Hiesinger “was apparently sick of letting himself be worn down by divergent interests at Thyssenkrupp," Independent Research analyst Sven Diermeier said.