Two people with knowledge of the matter have confirmed that Thyssenkrupp plans to spin off its defence division TKMS on October 20, in a deal analysts estimate could be worth up to 2.7 billion euro ($3.2 billion).

In August, the company said that it hoped to list TKMS (which makes submarines and frigates, as well as mine-sweeping technologies) in mid-October without specifying a specific date.

Thyssenkrupp plans to sell 49% of TKMS back to its shareholders. This will leave it with a majority stake in the division, which has benefited from a boom in demand across Europe.

Analysts estimate that TKMS is worth between 2.3 and 2.7 billion euro, or about a third Thyssenkrupp’s current market value.

ORDERS FOR HIGHER DEFENSE SPENDING BOOSTS

TKMS, at this valuation, would be the second largest German listing so far in 2014, behind Aumovio (a spin-off of automotive manufacturer Aumovio), while Ottobock, a prosthetics maker, could reach a 4.2 billion Euro value with its planned initial public offer next week.

People said that the timing of the spinoff was not final and could still change.

Thyssenkrupp has declined to comment.

TKMS held its first Capital Markets Day in preparation for the listing. The company expects margins to increase to over 7% in the medium-term, up from 4.3% during the fiscal year 2023/24.

The order book of the company has tripled in five years to 18.6 billion euro, thanks in part to European efforts to boost defence spending as a response to Russian aggression in Ukraine.

(source: Reuters)