Varta was long considered a beacon of hope. But then management overreached itself – and plunged the battery company into crisis. Now a solution seems to have been found.
The battery company Varta has been receiving a lot of bad news in recent months: hacker attacks on production, missing annual figures, relegation from the third division of the stock market, missed sales targets. Observers have witnessed how the traditional company from Ellwangen has slipped further and further into crisis. And this despite the fact that batteries are considered to be products of the future.
The fight for survival seems to be over for now. At the weekend, the company announced an agreement with financial creditors and investors. However, the restructuring plan contains several bitter pills. And questions arise: What will happen next for the Swabians? And how did it even get to this point?
Debt cut and Porsche entry as rescue
The concept envisages two main steps: a debt cut and the extension of loans should reduce liabilities from almost half a billion euros to 200 million euros. Then the share capital of Varta AG should be reduced to zero euros. The effect: the current shareholders will leave without compensation and the group will lose its stock exchange listing. Investor representatives have already announced resistance.
In addition to a company owned by the previous majority shareholder Michael Tojner, the Stuttgart-based sports car manufacturer Porsche will also join Varta. Both companies are investing 30 million euros each. Creditors are providing a further 60 million in loans. If everything goes as planned, the project should secure the financing of Varta AG until the end of 2027. The battery company filed for pre-insolvency restructuring proceedings in July.
Company with a long history
The beginnings of Varta – the name is made up of the initial letters of “sales, charging, repair of portable accumulators” – date back to 1887. Researcher Fridtjof Nansen took Varta batteries with him on a polar expedition. Today, Varta no longer has much in common with the company that was founded as an accumulator factory in Hagen. The reason: Varta ran into crisis in the 1990s, was split up and sold off piece by piece.
Boom in batteries for wireless headphones
The Austrian Tojner joined in 2007. He bought the micro battery division and took it public ten years later. Tojner seemed to have had the right instinct: the IPO was considered a success. The development was mainly driven by the rapidly increasing demand for rechargeable lithium-ion batteries – for example for wireless headphones and smartwatches.
In 2019, Varta also bought back the household battery division. Within a few years, the group almost quadrupled its revenue. Millions were invested – and debts were taken on – to expand production. During this time, the Swabians also got involved in the development of battery cells for electric cars.
From a beacon of hope to a case for restructuring
In 2022, the first cracks appeared in the picture: Varta had obviously become too dependent on one of its main customers – Apple. The US company had installed the batteries from Ellwangen in its wireless earphones at the time. When Apple looked for another supplier, the business came under pressure. The then Varta boss Herbert Schein scrapped the sales and profit targets – and resigned shortly afterwards.
In the period that followed, the global economic downturn and the high price of consumer electronics dealt a blow. Demand for the small batteries ebbed. Competition from the Far East and problems in the supply chain caused Varta additional problems.
E-car battery in the niche
In addition, Varta’s electric car battery remained a niche product. The battery is intended for hybrid vehicles and can only store a small amount of electricity. It stores energy that is generated while driving, for example when braking. This powers an electric motor that supports the combustion engine.
Varta management has repeatedly stated that there are many interested parties. However, the only known customer is Porsche. For this reason, the Zuffenhausen-based company also wants to take over a majority stake in the Varta subsidiary V4Drive Battery. Porsche urgently needs the batteries for the hybrid drive of the Porsche 911 Carrera GTS.
Tojner: “We set the bar too high”
Operational difficulties, high debts, deep red figures – Varta slipped further and further into crisis. Employees had to be put on short-time work, and later hundreds of jobs were cut. To make matters worse, a hacker attack in the spring brought production at the German sites to a standstill.
Employee and shareholder representatives primarily blame management errors for the misery. Tojner, who is chairman of Varta’s supervisory board, was also recently self-critical in the “Frankfurter Allgemeine Zeitung”: “We set the bar too high. We started various projects, invested heavily, and expanded production.”
Too much money had been invested too carelessly, said Tojner. Until the crash came – due to a lack of risk assessment and the organization being overloaded. “In retrospect, the supervisory board with me at the helm must also admit mistakes. I should have insisted on sustainable risk analyses much earlier,” he admitted.
What happens next?
Varta wants to hold on to all its locations in Germany. According to a spokesperson, there will be a moderate reduction in jobs in administration. However, workers are being sought in production. What this will ultimately mean for the number of employees – Varta currently employs around 4,000 people – is not yet clear.
The agreement must be documented in the coming weeks and submitted to the restructuring court. For this to happen, the committees of the parties involved must agree and the Federal Cartel Office must give the green light. It will probably take months before the concept is finalized. It is hoped that the process will be completed this year, it was said.
Source: Stern
