FRANKFURT (Reuters) - Thyssenkrupp is moving ahead with a planned spin-off of a minority stake in its warship division, the group said on Friday, adding the newly created holding would be listed on the Frankfurt stock exchange.

The company also said that talks with the German government about potential participation in its marine division, Thyssenkrupp Marine Systems (TKMS), were ongoing.

The comments came in response to a report in Handelsblatt, which cited people familiar with the matter as saying that Thyssenkrupp had cancelled a sale of TKMS to Rheinmetall, Europe's biggest ammunition maker.

"TKMS is already one of the largest system providers in the maritime defence industry in Germany. The company has excellent prospects in the relevant markets," Thyssenkrupp said in e-mailed comments.

"The increasing demand forecast for the coming years in TKMS's core businesses and the long-term geostrategic developments offer us new opportunities for growth, which we would like to realise best via an independent set-up."

Rheinmetall CEO Armin Papperger told Reuters last month that Rheinmetall had submitted a non-binding offer for TKMS at the end of 2024, adding the sales process had been stopped as Thyssenkrupp prefers a spin-off of the subsidiary.

Thyssenkrupp last month said that it was no longer pursuing a sale of the unit despite significant interest from strategic players, adding the spin-off of TKMS, which analysts said could be valued at up to 2.3 billion euros ($2.5 billion), was the primary goal.

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