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February 23, 2021 6:15 PM, EST

BorgWarner Agrees to Buy Akasol AG for $915 Million

Deal Will Strengthen Commercial Vehicle Battery Business
BorgWarner electric motorElectric drive vehicles have high voltage electrical systems not found on typical vehicles powered only by gasoline or diesel engines. (BorgWarner Corporate via YouTube)

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BorgWarner Inc. and Akasol AG have signed a business combination agreement intended to position BorgWarner to strengthen its commercial vehicle and off-highway battery systems business.

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As part of the deal, a wholly owned subsidiary of BorgWarner will launch a voluntary public takeover offer at an estimated $145 per share in cash for all outstanding shares of Akasol. Holders of 59% of Akasol’s outstanding shares have committed to accept the offer with respect to their shares, according to Auburn Hills, Mich.-based BorgWarner.

The offer represents a premium of approximately 23% to Akasol’s three-month volume-weighted average share price prior to the announcement and assesses Akasol at a total enterprise value of about $915 million, which includes the assumption of $32 million of net debt.

“We believe the acquisition is complementary to [BorgWarner’s] existing electrification technology portfolio, including the Romeo Power joint venture, adding another leading technology platform, furthering bolstering the company’s total system expertise and building out scale in commercial vehicle electrification,” Luke Junk, an analyst with Robert W. Baird & Co. Inc., wrote in a note.

Headquartered in Darmstadt, Germany, Akasol designs and manufactures customizable battery packs for use in buses, commercial vehicles, rail vehicles and industrial vehicles, as well as in ships and boats. It has more than 300 full-time employees and three facilities across Germany and one facility in the United States. Akasol’s proprietary system technology is cell-agnostic, providing a low-cost, flexible solution to world-class customers, according to the company.

Frederick Lissalde

Lissalde

“Akasol is an excellent strategic fit as BorgWarner seeks to continue to expand its electrification portfolio and capitalize on the profound industry shift towards electrification,” BorgWarner CEO Frédéric Lissalde, said in a release. “Akasol’s manufacturing footprint and established, in-production customer base are complementary to BorgWarner’s and would accelerate our foothold into the fast-growing commercial vehicle and off-highway battery pack market.”

BorgWarner has manufacturing and technical facilities in 96 locations in 24 countries, and 50,000 employees worldwide.

The offer, which has been unanimously approved by BorgWarner’s board of directors and the Akasol supervisory board, is expected to be completed late in the second quarter.

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BorgWarner noted its strategic acquisition of companies involved in vehicle electrification, to complement its organic efforts, started in 2015 with the acquisition of Remy International Inc., a manufacturer of rotating electrical components such as alternators, starter motors and electric traction motors for the automotive and commercial vehicle industry.

In 2017, BorgWarner acquired Sevcon Inc., a global player in electrification technologies. Sevcon complemented BorgWarner’s power electronics capabilities and also added onboard charging to the portfolio.

In February 2019, BorgWarner announced it formed Cascadia Motion and acquired two Oregon-based businesses, Rinehart Motion Systems and AM Racing Inc., and merged their operations into a new, wholly owned company focused on electric and hybrid propulsion solutions for niche and emerging applications.

In 2019, it announced its joint venture with battery pack manufacturer Romeo Power, and that company recently announced plans to go public.

“We certainly seem to have an electric future coming. People are spending money, creating partnerships,” said Mike Roeth, executive director of the North American Council for Freight Efficiency. “Most organizations are not cash-cowing diesel They are seeing the writing on the wall and figuring out, especially the big companies, how to be a larger part of the electric future and invest in it.”

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