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Age : 58
Country of residence : Unknown
Linked companies : Bayerische Motoren Werke AG
Biography : Heinrich Hiesinger is a German businessperson who has been at the helm of 7 different companies. Pre

Thyssenkrupp board to seek new CEO after Hiesinger quits

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07/06/2018 | 04:40pm CEST
FILE PHOTO: A logo of ThyssenKrupp AG is pictured outside their headquarters in Essen

DUESSELDORF/FRANKFURT (Reuters) - 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.

By Tom Käckenhoff and Maria Sheahan

Hiesinger's resignation came less than a week after he sealed a landmark joint venture deal with India's 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 criticised Thyssenkrupp's performance under Hiesinger, with shares down 28 percent 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 percent to the top of the pan-European STOXX Europe 600 index <.STOXX> on Friday before giving up some of its gains to trade 1.7 percent higher by 1415 GMT.

STRATEGY HOPES

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 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.

SUPPORT WANES

Hiesinger "was apparently sick of letting himself be worn down by divergent interests at Thyssenkrupp," Independent Research analyst Sven Diermeier said.

Hiesinger himself said in a letter to staff that a "joint understanding of board and supervisory board on the strategic direction of a company is a key pre-requisite for successfully leading a company".

The Krupp family foundation is Thyssenkrupp's biggest shareholder, without around 21 percent of shares, followed by Cevian with around 18 percent. Elliott has under 3 percent, according to its latest filing.

A person familiar with the matter told Reuters that Cevian partner Jens Tischendorf and former Deutsche Telekom Chief Executive Rene Obermann voted against the deal with Tata, while HSBC Germany chief Carola von Schmettow abstained at last week's board meeting.

Some key shareholders said the terms of the Tata deal were not favourable enough and that Hiesinger could have sought a better deal.

It was unclear to what extent the traditionally tight-lipped Krupp foundation supported the venture, but it said on Friday that it regretted Hiesinger's decision to leave and that it had always welcomed his proposals and supported his decisions.

(Additional reporting by Christoph Steitz and Simon Jessop; Writing by Maria Sheahan; Editing by David Evans/Keith Weir/Georgina Prodhan)

By Tom Käckenhoff and Maria Sheahan

Stocks mentioned in the article
ChangeLast1st jan.
BEIERSDORF 0.72% 97.3 Delayed Quote.-1.33%
DEUTSCHE BANK 1.47% 10.37 Delayed Quote.-35.62%
DEUTSCHE TELEKOM 0.69% 13.84 Delayed Quote.-7.10%
SIEMENS 0.79% 110.08 Delayed Quote.-5.97%
THYSSENKRUPP 0.69% 20.32 Delayed Quote.-16.66%
VOLKSWAGEN 0.93% 152.5 Delayed Quote.-9.22%
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