Volks sells majority stake in marine engine subsidiary
Volkswagen has agreed to sell a majority stake in marine engine subsidiary Everllence to Bain Capital for about $8.4 billion as it seeks to simplify its investment portfolio and boost its coffers.
The German automaker is undergoing a sweeping restructuring to cut costs and become more agile as the auto industry responds to rising geopolitical tensions, intense competition and rising trade barriers.
It said on Wednesday night that it will sell a 51% stake in Everllence - a company that develops ship engines and power plants, as well as large-scale heat pumps and carbon capture and storage technologies - while remaining a majority shareholder in the medium term with a 49% stake.
The company will receive approximately 7.40 billion euros, equivalent to US$8.40 billion.
"With this planned transaction, Volkswagen wants to significantly strengthen its own financial position as its transformation progresses," Volkswagen said in a statement.
The automaker said last week that although it is working on a broad restructuring plan that includes large-scale job cuts and streamlining production, the next few years will be critical as the market situation remains challenging.
Everllence, formerly known as MAN Energy Solutions, was acquired by Volkswagen in 2018 and had a book value of around 3.4 billion euros on Volkswagen's balance sheet at the end of May.
The unit is currently experiencing high demand due to growth in the energy transition and global infrastructure markets, as well as increasing electricity consumption driven by digitalization and data centers.
The agreement with Bain includes safeguards for the five sites in Germany until the end of 2030 and compulsory redundancies have been ruled out during this period.
The deal should also allow Volkswagen to reduce organizational complexity while strengthening its flexibility and finances, said Arno Antlitz, Volkswagen's chief financial officer and chief operating officer.
The parties intend to complete the agreement by the end of 2026, subject to regulatory approval.
Source: CNN