Rheinmetall will launch an initial public offering of its shares in its automotive division, Kolbenschmidt Pierburg or KSPG, in the first half of 2012 to concentrate on its defense operations. The company plans to list the shares of KSPG on the Frankfurt Stock Exchange in June, but will not immediately sell its entire stake in the division.
Rheinmetall plans to initially remain as the majority shareholder of KSPG but will yield control of the automotive unit in steps. According to Klaus Eberhardt (chief executive of Rheinmetall), the IPO will allow the company and KSPG to pursue their strategy of each focusing on core businesses. Eberhardt added that it paves the way for both Rheinmetall and KSPG to continue growth, increase market share and improve competitive positions.
People privy to the IPO plans said last week that Rheinmetall could sell a 50 percent stake in the IPO, valuing the KSPG at around EUR1.3 billion. However, the final amount that could be raised from the offering and the size of the stake to be offered will depend on investor demand and market conditions.
Rheinmetall stated in April that it expects its auto parts revenue to soar five percent to about EUR2.4 billion in 2012. The company originally planned to launch KSPG’s IPO in November 2011 but was forced to postpone it due to market volatility.