Volkswagen's Everllence valued well above €9 billion in bidding race, source says
Major Bidding and Acquisition Details
By Alexander Hübner, Rachel More and Christina Amann
BERLIN, June 25 (Reuters) - All three bids for Volkswagen's engine maker Everllence valued the unit "clearly above" €9 billion ($10.21 billion), a source directly involved in the talks told Reuters on Thursday.
Volkswagen picked U.S. private equity firm Bain Capital to acquire 51% of the unit in what is expected to be one of European industry's biggest carve-outs this year, helping the carmaker streamline its portfolio at a time of painful cuts.
Bidding Process and Risk Guarantees
Role of Risk Guarantees in the Sale
RISK GUARANTEES PLAYED A ROLE, SOURCE SAYS
Bain's bid was the lowest, according to the source, who said it may have offered the most guarantees relating to a project named "Balthazar", an internal audit conducted by Everllence of individual business partners.
Japanese authorities had investigated engine manufacturers in 2024 over fuel consumption data, prompting the internal review.
Everllence did not make the engines or conduct the tests probed and has said it is not aware of being the subject of "any claims for damages or regulatory proceedings". However, Balthazar had played a role in the sales process, the source said.
Competing Bids and Consortiums
A second source also said Bain submitted the lowest bid. Both sources asked not to be named since details of the offers were not public.
Bain won out against two other private equity firms, CVC and EQT, according to sources.
Volkswagen declined to comment on the size of the bids.
In a statement, Bain said it would work closely with Everllence's management and Volkswagen "to support the company's next phase of growth". It did not disclose financial details of the deal.
EQT and CVC did not immediately respond to requests for comment.
EQT Consortium and Bidding Process
EQT 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, according to multiple Volkswagen sources.
CVC's Highest Bid
CVC made the highest bid, the two sources familiar with the matter told Reuters.
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.
Financial Impact and Future Prospects
Share Performance and Proceeds
SHARES GET BOOST FROM EXPECTED PROCEEDS
Volkswagen shares climbed by as much as 3% on Thursday following Wednesday night's announcement of the deal, which is set to generate €7.4 billion for the carmaker as it forges ahead with restructuring.
Everllence's Growth and Market Position
Everllence is a leading maker of marine engines and 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.
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, which it expects to complete by the end of the year.
Currency Note
($1 = 0.8799 euros)
(Editing by Joe Bavier)
