Friday, January 10, 2020

Brookfield and Singapore’s Temasek Make Joint Bid for Thyssenkrupp Elevator Unit - $16.5B

Brookfield (BAM) and Singapore’s Temasek Make Joint Bid for Thyssenkrupp Elevator Unit - $16.5B. Otis of United Technologies (UTX) is #1 in the market and it is an Oligopoly with 67% market share from top players including Otis (US based) Kone Oyj (Finland based) Schindler (Switzerland based) and Thyssenkrupp (Germany based) and Hitachi (Japan based). Market share by revenue is 12% Otis, 11% Schindler, 10% Kone Oyj, 9% Thyssenkrupp AG, 7% Hitachi. 

Thyssenkrupp is a conglomerate and its elevator business is neglected and has lower profit margins of 10% compared to 15% by Otis. With German 10 year bond rates available at 1% Brookfield can make a bid and leveraged returns can be good if they can improve the business. 

Elevator companies have long term service contracts and they make 50% of the money through services. Asia which has 50%+ of world population is the fastest growing market with India and China having major growth opportunities. 

We should know the outcome of the sale process within a month or so. 















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