HANNOVER, Germany — Germany's largest bank is offering to take battery-maker Varta AG private so it can invest in future battery technology.
In what amounts to a bank-financed management buyout, DB Investor, a subsidiary of Deutsche Bank, has offered to buy Varta shares for E14.50 (US$12.59) per share, a substantial premium over the E8.7 to E12.3 (US$7.28 to US$10.29) range of the share price this year.
The deal already has the approval of the largest shareholder, the Quandt family, which owns 43% of the company. The Quandts also controlAG. The bid was contingent upon DB Investor getting 90% of the shares by Dec. 10.
Varta is the No.2 automotive battery maker in Europe, based on OEM and aftermarket business. But the business in the mid-term is in jeopardy. Future cars will require 42-volt systems using lithium-ion or nickel-metal hydride technologies instead of lead-acid.
Varta since 1995 has invested between E54 million and E60 million (US$45.2 million and US$50.2 million) annually, but it needs to double that rate if it is to compete in the future. By keeping development expenses in check, Varta has managed to maintain profitability and a 4% dividend for its owners.
But pending changes in automotive battery markets demand substantially larger investments. By changing owners, Varta can change its strategy.