The IT department decides whether the spin-off pays off

08.07.2026

7 min read

Continental and ThyssenKrupp floated core business units within five weeks of each other in 2025, while Siemens announced a planned reduction in its stake in Siemens Healthineers. Strategic groundwork for these moves was laid months in advance. Whether Aumovio and TKMS can create value as independent companies will hinge on the IT separation that follows-an aspect largely absent from most analyses to date.

Key Takeaways

Two completed listings, one announcement. Aumovio listed 18 September 2025, TKMS listed 20 October 2025; Siemens’ planned Healthineers stake reduction from 12 November 2025 remains pending.
The conglomerate discount is real-and quantifiable. German diversified groups trade, according to Eulerich et al.’s analysis of ~6,000 firm-years, at a 7.9–11.5 % discount to standalone peers.
IT is among the costliest parts of a carve-out. Separating ERP, identity management and licences can, based on carve-out experience, match or exceed restructuring outlays-and determine whether the standalone valuation holds.

Two IPOs, One Announcement, One Shared Pattern

What is an IT carve-out? The technical separation of an entity’s IT landscape from its former parent: dedicated ERP instances, identity and access management, licence agreements and infrastructure. Until the split is finalised, the new unit typically continues via a Transition Service Agreement, or TSA, running on the ex-parent’s systems.

Two German industrial giants completed this feat within five weeks in 2025; a third has announced its intention. Continental floated its automotive division as Aumovio on 18 September 2025 (ticker AMV0), debut market cap ~€3.5 bn. Continental itself becomes a pure-play tyre maker. Five weeks later, on 20 October 2025, ThyssenKrupp Marine Systems (TKMS) listed at more than double the expected valuation: €5.15 bn versus the €2.3–2.7 bn forecast, buoyed by an order backlog of €18.6 bn in defence. ThyssenKrupp retains a 51 % stake. On 12 November 2025 Siemens said it would trim its stake in Siemens Healthineers from ~67 % to ~37 %, with further reductions planned mid-term; the deal itself remains pending, with shareholder approval slated for the February 2027 AGM. In 2024 Siemens had already exited its drive-technology unit Innomotics via a €3.5 bn trade sale to KPS Capital Partners, closing in October 2024.

Why the market values individual parts higher than the whole

A recurring argument behind all three decisions is the conglomerate discount: conglomerates with multiple, strategically unrelated business fields tend to be valued lower on the capital market than the sum of their individual parts. An analysis by Eulerich et al. covering nearly 6,000 German company-years between 2000 and 2019 estimates this discount at 7.9 to 11.5 percent. Investors and analysts argue with this sum-of-the-parts logic: a focused defense company like TKMS can be valued against pure defense stocks and benefits from the current defense boom, whereas within a group structure combined with steel and plant engineering, this premium is diluted.

External pressure also plays a role: Chinese competitors, US tariffs, high energy and labor costs, and an overall stagnating German industrial economy are accelerating, according to market observers, the willingness to divest non-core areas and focus on the highest-margin core business. At Continental, the reaction was immediately visible: the Continental share lost around a fifth of its value on the day of the Aumovio spin-off-a purely notional effect due to the allocation of shares to shareholders, not a real loss of value.

Where the value-creation thesis breaks down technically

The strategic logic behind the split is ready on announcement day. The technical implementation only begins afterward and, based on experience from carve-out projects, can take six to eighteen months-or longer. During this phase, it becomes clear whether the newly independent unit can also operationally support the valuation already priced into the capital market.

Four factors weigh particularly heavily. First, the separation of ERP systems, application landscapes, and data-often the most complex and costly single measure in the entire carve-out. Second, shared contracts and licenses, so-called commingled contracts, which must be renegotiated and released by third-party providers. Third, the reorganization of identity and access management as well as cybersecurity as independent functions no longer supported by the former parent company. Fourth, the TSA dependency itself: the longer a new unit remains dependent on the IT services of the former parent company, the longer costs, security risks, and knowledge-transfer gaps persist-precisely the issues an independent valuation is meant to eliminate.

Pros and cons of rapid IT independence

Pros

Shorter TSA duration reduces ongoing dependency costs. Independent systems enable a true standalone valuation without parent-company discounts. A clean-slate opportunity for modernization instead of migrating legacy systems.

Cons

Loss of economies of scale in procurement and shared services. High one-off separation costs and stranded costs for the remaining group. Risk of talent flight and management distraction during the transition.

The counterargument: Not every spin-off creates value

The conglomerate discount is not a law of nature that automatically rewards every spin-off. In 2019, Gap Inc. announced plans to spin off the Old Navy brand as an independent company, only to shelve the plan in 2020 after the standalone outlook deteriorated under competitive pressure. Siemens Energy, spun off from Siemens in 2020, struggled in the following years with significant losses in its wind-power business and sharp share-price pressure before conditions improved. The outcome depends heavily on the industry, the fundamentals of the spun-off unit, and the quality of operational execution-not solely on the strategic logic on paper.

For CIOs, this means: the spin-off decision itself lies outside their sphere of influence. The quality of the IT separation, Day-1 readiness, and the TSA exit plan, however, are squarely within their remit-and it is here that the difference is made between a boardroom decision translating into the expected valuation gain or a year of costly operational disruption.

What to do in the next 90 days

First: For every ongoing or foreseeable portfolio decision within your own group, initiate an IT carve-out inventory early-don’t wait until after the board decision. Commingled contracts and shared identity systems require six to eighteen months of lead time. Second: For every existing TSA, set a firm exit deadline with milestones instead of silently extending the dependency. Third: Verify the day-one readiness of your own governance, reporting and compliance structures before any new unit goes to market-after-listing fixes cost far more than pre-listing diligence.

Frequently Asked Questions

How do the 2025 Continental, ThyssenKrupp and Siemens transactions differ?

Aumovio and TKMS are full stock-exchange listings with majority divestment or majority retention by the former parent group. Siemens Healthineers deconsolidation is not a completed listing but an announced share reduction whose shareholder vote, according to Siemens, will not occur until the annual meeting in February 2027. The Siemens Innomotics transaction from 2024, by contrast, was a classic sale to a financial investor, not an IPO.

What is a Transition Service Agreement?

A contractual arrangement under which the former parent continues to provide IT systems, support or other services to the newly spun-off unit for a fee until the unit can operate independently. The longer the TSA runs, the longer cost and security risks remain.

How large is the conglomerate discount on the German capital market?

A scientific analysis of roughly 6,000 German firm-years between 2000 and 2019 puts the discount at 7.9 to 11.5 percent compared with comparable focused companies.

How long does an IT carve-out typically take?

Empirical evidence from carve-out projects cites six to eighteen months or longer, depending on the complexity of the ERP landscape, the number of shared contracts and the scope of identity and security infrastructure that must be rebuilt.