What’s Going On Here?Germany’s Thyssenkrupp is thinking about listing its hydrogen business Uhde on the stock market, as if to prove that the gas really is greener on the Uhde side. What Does This Mean?Uhde – which is 66% owned by conglomerate Thyssenkrupp – builds plants that use renewable energy to produce hydrogen, which can then be fed into fuel cells to generate emission-free electricity. The gas can likewise be used to replace fossil fuels in industrial applications, like the manufacturing of steel and cement.
All that fits snugly into an increasingly eco-conscious landscape, and explains why there’s growing investor interest in Uhde’s hydrogen-based technologies. So Thyssenkrupp is looking to capitalize: the initial public offering – which could come as soon as the first quarter of next year – stands to value Uhde at as much as $5.7 billion. Why Should I Care?For markets: The “conglomerate discount” in action.
If Uhde lists at $5.7 billion, that would make Thyssenkrupp’s 66% stake in the company worth $3.8 billion. But Thyssenkrupp itself was worth $6.5 billion before the news broke, which implies investors were valuing the rest of its business at just $2.7 billion. Consider, then, that the rest of the business generated 99% of Thyssenkrupp’s revenue last year, and you realize investors have been valuing the conglomerate at far less than the sum of its parts. No wonder they sent Thyssenkrupp’s up 12% after the news…
The bigger picture: More clean energy, please.
Interest in hydrogen is about more than just sustainability: this year’s surge in natural gas and oil prices has brought the need for diversified energy sources into even sharper focus. Especially given that the surge doesn’t look like it’s going to drop off any time soon, with Trafigura – one of the world’s biggest oil trading firms – saying on Tuesday that it’s expecting the price of oil to climb from around $80 a barrel nowadays to $100 in the long term. | 
