FRANKFURT (Reuters) - German conglomerate Thyssenkrupp TKAG.DE on Monday defended a landmark deal to split into two as concerns mounted over whether the plans, which will result in a 1 billion euro ($1.2 billion) tax hit, go far enough.

FILE PHOTO: A logo of ThyssenKrupp AG is pictured outside the ThyssenKrupp headquarters in Essen, November 23, 2017. REUTERS/Thilo Schmuelgen/File Photo

Last week Thyssenkrupp said it would spin off its elevators, car parts and plant engineering units into a separate listed entity named Thyssenkrupp Industrials, while keeping steel and materials-related activities.

In the first analyst call since the plans were announced, Thyssenkrupp Chief Executive Guido Kerkhoff, who was given a five-year contract on Sunday, said the new structure would reduce complexity and give shareholders a more transparent asset to invest in.

Some analysts said however that Thyssenkrupp Industrials, while more focused, would still be a complex entity.

“Ultimately, we’ve gone from one big conglomerate to two smaller conglomerates,” Bank of America Merrill Lynch analyst Cedar Ekblom said during the call.

“TK Industrials has got three divisions, which are all capital goods businesses, but ultimately, are very different businesses with very different end-markets.”

Kerkhoff said, however, that the links between the divisions were significant.

“There is some glue between the three,” he said. “They’re all depending on the same megatrends in the world. They’re all depending on engineering and service competencies throughout the businesses.”

Shares in the company fell as much as 4.7 percent after the call.

The corporate split came in response to years of shareholder pressure to simplify Thyssenkrupp’s sprawling conglomerate set-up. Analysts have pointed out that the group still needs a strategy for the business following the structural change.

The split bears similarity to E.ON's EONGn.DE spin-off of Uniper UN01.DE, in which the German utility kept a minority stake which it said could be sold on the open market. It was ultimately acquired by Finnish peer Fortum FORTUM.HE.

In a similar vein, Thyssenkrupp, which will be renamed Thyssenkrupp Materials, will quickly move to sell the minority stake in Thyssenkrupp Industrials it will still hold after the spin-off is complete.

“The sooner the better,” Kerkhoff said, adding that Thyssenkrupp Materials would sell at the highest possible price as soon as the market could absorb it.

The corporate split still requires shareholder approval, which is expected by early 2019.

“Thyssenkrupp Materials is sustainable without the stake in Thyssenkrupp Industrials,” Kerkhoff said.