A solution to the long-term crisis in which the well-known company for the production of batteries Varta has fallen is in sight - it will be taken over by Porsche.
Over the past months, bad news has been piling up at the battery company Varta: the company was the target of a hacker attack, annual earnings reports began to be missing, set goals were not met. A traditional company from Elwangen in Germany is sinking deeper and deeper into crisis - despite batteries being considered the products of the future, he writes Nanny Vela.
The good news: the fight for survival appears to be temporarily over. The company announced over the weekend that an agreement had been reached with financial creditors and investors. A plan for restructuring the company was made.
Debt repayment and entry of Porsche as a rescue
The plan primarily envisages two steps: writing off part of the debt and extending the loan, which should reduce the debt from almost half a billion euros to 200 million euros. Then the basic capital of Varta doo will be reduced to - zero euros.
The consequence of that measure: current shareholders remain without compensation, and the company leaves the stock market. Shareholder representatives have already announced their resistance.
In addition to one company of the former majority owner, Michael Tojner, the sports car manufacturer Porsche is now entering Varta. The two parties are investing 30 million euros each. An additional 60 million will come as a loan from creditors. If all goes according to plan, this venture should provide funding for the company by the end of 2027.
A company with a long history
The company - whose name consists of the initial letters of the word "Sale, charging and repair of portable batteries" - was founded in 1887. Even explorer Fridtjof Nansen had Varta batteries on his polar expedition.
Today, Varta has little in common with the company that was founded as a battery factory in Hagen. The reason: the company fell into crisis in the nineties. It was divided and its parts were sold.
Boom thanks to batteries for wireless headphones
The Austrian Toyner entered the business in 2007. He bought the microbattery sector and took it public ten years later.
Toyner seemed to have a good feeling: the start of trading on the stock exchange was considered a success. The development was mainly dictated by the growing demand for rechargeables lithium-ion batteries – for example for wireless headphones and "smart" watches.
In 2019, Varta also reacquired (reclaimed) the household battery business. Within a few years, the company had almost quadrupled its revenue. In order to expand production, several millions were invested - and new debts were taken. In that period, the production of battery cells for electric cars also began.
From bearer of hope to case for restructuring
Already in 2022, the first cracks appeared: Varta apparently relied too much on one of its main customers – Apple. The American company was then incorporating batteries from Elwangen into its wireless headphones. When Apple found another supplier, the business was threatened. Warta's head at the time, Herbert Schein, failed to meet revenue and profit targets – and resigned soon after.
After that, the global economic crisis and high inflation dealt a blow to the consumer electronics market. Demand for small batteries has declined. Competition from the Far East and problems in the supply chain made the situation even more difficult for Varta.
Battery for electric vehicles in niche
In addition, Varta's battery for electric vehicles has remained a niche product: it is only intended for hybrid vehicles and can only store a small amount of energy. It is the energy that is created during driving, for example by braking. This starts the electric motor that serves as support for the internal combustion engine.
Now Porsche plans to take a majority stake in Varta's daughter company V4Drive Battery. That auto giant urgently needs batteries for the hybrid drive of the 911 karera GTS.
Toyner: "We set the bar too high"
Varta continued to sink into crisis. Workers had to work part-time, and later hundreds of jobs were cut. As if that wasn't enough, in the spring a hacker attack paralyzed production at German locations.
Representatives of workers and shareholders mostly blame managers for the crisis. Even Toyner, the chairman of the company's supervisory board, was self-critical in a recent interview with "Frankfurter Allgemeine Zeitung": "We set the bar too high. We launched various projects, invested a lot, expanded production."
He said that too much money was foolishly invested, until it collapsed - due to a lack of risk assessment and organizational overload. "Looking back, I have to admit that the supervisory board, led by me, should have insisted much earlier on the development of viable risk analyses," he admitted.
What next?
Varta wants to keep all its locations in Germany. According to the company's spokesperson, there will be a moderate reduction in the number of jobs in the administration. However, workers are required in production. What this ultimately means for the total number of employees – currently around 4.000 people – is not yet known.
The agreement must be documented in the coming weeks and submitted to the bankruptcy court. This requires the consent of all parties involved in the process, and the German Federal Anti-Cartel Office must give the green light. It is expected to take several months before the plan is finalized. Everyone hopes that the process will be completed by the end of the year.
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