FRANKFURT (Dow Jones)–German industrial conglomerate ThyssenKrupp AG (TKA.XE) Friday said it had cancelled a large part of the sale of its shipbuilding business to Abu Dhabi Mar, and will only now go ahead with the sale of Kiel-based container ship producer HDW Gaarden.
Citing “changed commercial prospects,” the German company said the sale of the Hamburg-based mega yachts shipyard Blohm + Voss had been called off and a planned joint venture that would have focused on designing and building naval surface ships, such as frigates, corvettes and offshore patrol vessels.
“Both parties believe that the commercial drivers for the transaction have weakened to a point that opportunities previously identified are no longer commercially viable,” ThyssenKrupp said.
ThyssenKrupp hasn’t disclosed the value of the original proposed deal.
The shift comes on the heels of recent political unrest in large parts of the Middle East and North Africa that has posed new challenges to the region.
The previous plan to sell virtually all of its civil ship building operations to Abu Dhabi Mar dated back to an agreement struck in October 2009 and was part of ThyssenKrupp’s strategy to focus on the more profitable military ship construction and services business.
During the financial crisis, plummeting orders in the civil ship building sector had exacerbated an already challenging market environment characterized by global overcapacity.
ThyssenKrupp added that the sale of its civil ship building operations to Abu Dhabi Mar now only comprises the activities of Kiel-based container ship producer HDW Gaarden.
ThyssenKrupp said that it will immediately start working on solutions for the civil ship [ship building] operations business of Blohm + Voss, with the goal of transferring these companies in the medium-term to new owners “capable of placing a stronger strategic focus on the business…”
ThyssenKrupp also said it will continue to focus its ship building operations on the military sector, adding that it is confident that this segment will “contribute appropriately” to its earnings.
The company Friday said that a EUR2 billion order from the Republic of Turkey for the delivery of six submarines has entered into force after having received a first advance payment.
ThyssenKrupp also recently started construction of four frigates of the F 125 class for the German navy.
Commerzbank analyst Ingo-Martin Schachel, who has a “buy” recommendation on ThyssenKrupp shares, said that improved order situation at the company’s naval ship building operations should help mitigate possible disappointment by the market over the collapse of large parts of the deal with Abu Dhabi Mar.
Still, at 0732 GMT ThyssenKrupp shares traded lower EUR0.66 or 1.8% at EUR35.18, underperforming a broadly flat market.
-By Jan Hromadko, Dow Jones Newswires