Handelsblatt, citing sources within the German government, reported that there are no current plans for the new government to acquire a stake in Thyssenkrupp’s defence division TKMS.

According to the report the Chancellery and the Ministries involved have agreed to not push for state involvement in this time as Thyssenkrupp’s labour leaders had requested.

Thyssenkrupp spokesperson said that the company is engaged in constructive discussion with the government. "But we do not want to preempt the outcome of the discussions."

Thyssenkrupp said that the government's participation in any divestment was not a precondition. The planned spin-off - which is expected to happen by the end the year – would proceed regardless.

Last month, Chairman Siegfried Russwurm stated that it was unnecessary to talk about the German government's participation in safeguarding Germany's interests because Berlin either is a client or has to approve equipment sales abroad.

The German economy and defense ministries have not responded to email requests for comments.

Handelsblatt reported that the government would instead look for a "security contract" to make sure national defense and jobs were not put at risk by this spin-off. This agreement would include regular consultations.

The paper stated that the agreement would include a government right of refusal if a strategic shareholder wanted to purchase TKMS. However, this is not expected.

At an extraordinary general assembly on August 8, Thyssenkrupp's shareholders will vote on a plan to spin-off a 49% interest in TKMS.

TKMS has benefited from a broader surge of defence stocks. This was boosted by increased military spending in Europe amid concerns about dwindling US support. Reporting by Anneli palmen and Tom Kaeckenhoff. Miranda Murray and Christoph Steitz wrote the article. Editing by Mark Potter and Lincoln Feast)

(source: Reuters)