Summary
- Bain Capital will buy 51% of Everllence from Volkswagen
- The transaction values Everllence at more than €9 billion, according to Reuters calculations
- Volkswagen expects the leveraged buyout transaction to complete by year-end
BERLIN, (Reuters) – Volkswagen shares climbed 2.4% on Thursday following the announcement of the sale of a majority stake in its engine unit Everllence in a deal set to generate €7.4 billion ($8.41 billion) for the carmaker as it forges ahead with restructuring.
Following a weeks-long bidding race, Europe’s largest carmaker announced late on Wednesday it had picked U.S. private equity firm Bain Capital to buy 51% of Everllence, a leading maker of marine engines which is also looking for growth in the AI boom via generator demand for data centres.
“With this envisaged transaction, Volkswagen would significantly strengthen its own financial position as its transformation moves forward,” a JP Morgan analyst said.
Based on Everllence’s book value of €3.4 billion from late May and the proceeds of the transaction, the deal values the business at more than €9 billion, according to Reuters calculations.
Volkswagen CEO Oliver Blume has pledged to trim the sprawling auto group’s portfolio to focus on its core automotive business, where pressures from tariffs, Chinese competition and the costly shift to electric vehicles have weighed on earnings.
Volkswagen said in a statement it will decide at a later date what to do with the proceeds from the leveraged buy-out transaction. The proceeds consist of the undisclosed price for the stake, the revaluation of the company and the debt following completion of the transaction, expected by the end of the year.
Bain won the race against private equity firms CVC and EQT, according to sources familiar with the matter. The latter had formed a consortium including Volkswagen’s top shareholder Porsche SE, prompting management to conduct the bidding via a closed envelope process, with many supervisory board members abstaining to avoid conflicts of interest.
A spokesperson for Porsche SE, the investment vehicle of Germany’s Porsche-Piech auto dynasty, said the process had been conducted in a transparent and professional manner.
($1 = 0.8799 euros)
Reporting by Rachel More; Editing by Joe Bavier
