ThyssenKrupp CEO Quits

The signing off of the merger deal of ThyssenKrupp steel-making business with India’s Tata Steel further brought the CEO of the German multinational, Mr. Heinrich Hiesinger to put down his papers. In almost a week after the joint-venture deal was entered into, the move would call for a corporate restructuring of the conglomerate.

The German conglomerate was being headed by Hiesinger for the past 7 years and he worked hard to bring up the sales of the company and create a better work environment for it. He was regarded as a major industrial giant during his tenure.

THE CAUSE:

For a very long time, the CEO of the group was a victim of criticism and the successful merger of the company only added up to the CEO’s woes as he would be losing the existing control of his operations. In the recent weeks, the inability of the ThyssenKrupp management to be able to work out better terms only worsened the current scenario. The shareholders were condemning the CEO for the fall in the stock prices and the revenue prices of the company. Shareholders accused Heinrich of a 28% fall in the shares of the company since his tenure began.

The idea of the merger of the German conglomerate with the Indian steel business Tata further disappointed the shareholders and this exerted pressure on Hiesinger. While he was able to steer the Tata deal but he lost the support of board members in the entire process.

THE MERGER DEAL

It took two long years for ThyssenKrupp to be able to culminate this deal with Tata Steel and the CEO was constantly backing the deal trying to support the business along with working on increasing its existing structure. The deal would cause the size of the group to increase not only from the perspective of more employees with the merger but also in terms of increased sales and sites of operation. The deal has been signed in a manner so as to give both the partners namely, Tata and ThyssenKrupp a 1:1 equity stake in the business with a condition of ThyssenKrupp being granted a 55% proportion of the collections from the proceeds of the IPO. Apart from this, the power of deciding the timing for any further IPO was handed over to ThyssenKrupp.

The Fate of ThyssenKrupp

Heisinger quit on the note that he wanted the management to go on with the discussion of the future of the conglomerate. Though the sudden quitting of the CEO of the German company has raised a question mark on the fate of the company, the immediate action has not been taken to appoint an interim CEO. The senior executives of the company have been asked to take charge of the company. There had to be a revelation of another new strategy of the company which has now been put behind owing to the exit by the CEO of ThyssenKrupp.

At this juncture, the most important requirement for ensuring the stability of the business is to be able to sustain the existing business and continue with its operations.

Executing the Deal

Tata Steel has entered into an agreement with ThyssenKrupp for ensuring that the change of the state of affairs would not disregard the main idea of the coming together of the two companies. Investors of the company, however are quite positive about the exit of the CEO from the company as they believe that he had divergent interests which were a major cause of the business running into a negative financial position. They also believe that this step would allow room for new strategies to help the business ride a successful wave altogether. A structured process would be followed for the appointment of the new successor for the business.

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