Thyssenkrupp shareholders will vote on Friday on the planned spin-off its defence division, amid expectations that its value may increase due to a radical change in European defense spending.

Thyssenkrupp’s TKMS Division, which manufactures submarines and frigates as well as developing mine-sweeping technology, has seen its order book grow to over 18 billion euros (over 21 billion dollars) from just 11.7 billion dollars at the end September of last year.

This has led to a rise in the parent company's shares, which have doubled since January.

Thyssenkrupp intends to sell 49% of TKMS back to existing shareholders, while holding the remaining stake.

The plan will be voted on at a shareholder meeting later in the day on Friday, which includes the Alfried Krupp von Bohlen and Halbach Foundation, Thyssenkrupp’s largest shareholder. The meeting began at 8am GMT.

Analysts anticipate that the spin-off will take place in the second half of this year. However, Thyssenkrupp is yet to confirm the exact date.

Berlin and Thyssenkrupp reached a preliminary deal last month that ensures the German government will maintain influence over TKMS. The goal is to retain a level of control on strategic defence assets.

The German government has not yet taken a majority stake in TKMS, despite the demands of the labour unions.

Stephanie Schmoliner, vice-chairman of the TKMS supervisory board and member of the IG Metall union, repeated on Friday these demands. She said that a government stake is "essential".

As a result of the Russian invasion of Ukraine and after U.S. president Donald Trump called on NATO members in Europe to increase their military budgets, there has been an increase in defense spending.

(source: Reuters)