German steel and engineering group Thyssenkrupp announced on Wednesday it has agreed to sell its entire elevator business to a group of financial investors led by Advent International for about $19 billion.
The sale will see Thyssenkrupp spin off its elevators unit into a new holding and completely separate it from its industrial businesses. In exchange, investors in the new holding will receive about 10.7 billion euros ($13.9 billion).
“This transaction is strategic for Thyssenkrupp and comes at a decisive time in our history,” Thyssenkrupp CEO Heinrich Hiesinger said in a statement. “It provides important strategic clarity for the industrial business, with a clear focus on the key sustainable growth areas of steel and elevators.”
“It should help optimize our supply chain and should offer improved performance by overcoming the direct financial impact of acquired steel investments,” he added.
Thyssenkrupp has been seeking to focus on its only area of strong growth in recent years – steel. Last year, its mills in Brazil and the U.S. were hit by accusations that they manipulated the market, a move that led to investigations by Brazilian authorities and U.S. regulators. And in January it was forced to recall more than 800,000 of its slabs after allegations of defects from a fire brigade. The recall is expected to cost some 7.5 billion euros.
The group also announced it has secured financing for the unit’s post-spinoff activities.