What's Happening?
Thyssenkrupp Marine Systems (TKMS), Germany's largest naval shipbuilder, is set to begin trading on the Frankfurt Stock Exchange on October 20, 2025. This move comes as a spin-off from Thyssenkrupp's naval division, with existing shareholders receiving
one TKMS share for every 20 Thyssenkrupp shares held. Thyssenkrupp retains a 51% stake in TKMS through a holding company. TKMS specializes in building conventional submarines, frigates, and corvettes, and is a leader in non-nuclear submarines using air-independent fuel-cell propulsion. The company has an order backlog of €18.6 billion, driven by increased demand following geopolitical tensions, particularly Russia's invasion of Ukraine. In the first half of FY2024/25, TKMS's order intake surged to €5.6 billion, a significant increase from the previous year.
Why It's Important?
The listing of TKMS is significant as it occurs during a period of heightened defense spending in Europe, spurred by geopolitical tensions. This move allows TKMS to access capital markets independently, potentially facilitating further research and development and expansion efforts. The spin-off is part of Thyssenkrupp's broader strategy to streamline its operations and focus on core businesses. For investors, TKMS offers a direct opportunity to invest in the naval defense sector, which has been challenging to access directly. The German government's 'Zeitenwende' defense spending surge has particularly benefited naval programs, with plans to modernize its fleet with new warships and submarines.
What's Next?
As an independent entity, TKMS can now raise capital for future projects, including R&D and shipyard expansion. The company plans to pay out 30-50% of net earnings as dividends from FY2025/26 onward, with the first dividend expected by 2027. The German government has secured a 'golden share' in TKMS, giving it veto rights over significant sales and ensuring strategic decisions align with national security interests. This arrangement allows TKMS to operate with entrepreneurial freedom while maintaining state oversight. The listing is expected to attract strong investor interest, given the current defense spending climate and TKMS's strategic position in the naval defense market.
Beyond the Headlines
The spin-off of TKMS reflects a broader trend of consolidation and strategic realignment within the European defense industry. The German government’s involvement through a 'golden share' highlights the importance of maintaining control over critical defense technologies. This move could pave the way for further consolidation among European naval shipbuilders, potentially leading to a more integrated defense industry similar to the aerospace sector with Airbus. The success of TKMS as a standalone entity will depend on its ability to capitalize on the current defense spending boom and execute its growth strategy effectively.
