BorgWarner Inc. (NYSE: BWA) will pay $880 million to acquire commercial vehicle battery maker AKASOL. The European manufacturer has $2.4 billion in business booked with major truck makers including Volvo Group and Daimler Trucks.
AKASOL designs and manufactures customizable lithium-ion battery systems for buses, commercial, rail and industrial vehicles, as well as in ships and boats. It has 330 full-time employees and three facilities in Germany and one in the U.S.
The acquisition accelerates BorgWarner’s push into commercial vehicle electrification. It is paying a 23% premium over the average AKASOL (ASL.D.DX) share price over the last three months. BorgWarner also is taking on $32.7 million in AKASOL debt. The transaction is mostly cash. with the deal expected to close late in the second quarter.
“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,” Frédéric Lissalde, president and CEO of BorgWarner, said in a press release.
BorgWarner spent $3.3 billion last October to purchase Delphi Technologies, once part of the world’s largest automotive supplier.
“The acquisition of a well-regarded battery pack assembler, AKASOL, deepens the company’s reach into commercial vehicles, which we believe today makes up about mid-teens percent of revenue of the combined BorgWarner/Delphi,” Cowen analyst Jeffrey Osborne said in a research note.
Takeover success assured
The success of the Akasol buyout is assured. Holders of 59% of the Darmstadt, Germany-based company’s outstanding shares committed to vote for the business combination. AKASOL will operate as a wholly owned subsidiary of BorgWarner and keep its current management. That includes AKASOL founder and CEO Sven Schulz.
“BorgWarner shares our vision of emission-free mobility, and with joint forces, we will expand AKASOL’s technology and market leadership for high-performance battery systems,” Schulz said.
Complements battery joint venture
The AKASOL takeover complements a 60-40 joint venture BorgWarner formed in 2019 with Romeo Power. The Los Angeles-based battery pack maker has significant business with Canadian electric truck maker Lion Electric Co. and startup Nikola Corp. (NASDAQ: NKLA).
“Our investment in Romeo was our first step into the EV battery space. And the investment has been successful to date,” BorgWarner spokeswoman Michelle Collins told FreightWaves.
“Our interest in and commitment to electrification have only increased, and the pending acquisition of AKASOL is an important next step as we advance and accelerate our strategic objectives, which include building a leadership position in this space over the long term.”
BorgWarner sees AKASOL helping to strengthen its commercial vehicle and off-highway battery systems business, gaining attention and investment over its traditional diesel-based powertrain products. It projects AKASOL will continue $1 billion in annual revenue by 2030.
The global electric vehicle and hybrid lithium-ion battery systems market for all vehicles is projected to be worth an estimated $140 billion by 2030, according to IHS Markit.
“This is an area where we’re going to see a lot more adoption in the next several years,” Sam Abuelsamid, principal analyst at Guidehouse Insights, told FreightWaves. “A lot of big companies are moving their fleets over to electrified vehicles from diesel. Having a foothold in those segments is going to be important for a company like BorgWarner.”