The ailing battery manufacturer Varta is in for some financial relief: according to Varta, the sports car manufacturer Porsche is prepared to take over a majority stake in the electric car battery division, "V4Drive".

A non-binding agreement has already been signed, but Porsche AG's entry is still dependent on a detailed examination of the books, among other things, the company explained in Ellwangen on Friday night. V4Drive was once seen as a great source of hope for Varta, but has so far turned out to be a burden. Due to a lack of orders, the company put the construction of a factory for the large lithium-ion batteries on hold. Porsche had already ordered battery cells from Varta in 2021, but there was no news of further orders.

The possible entry of the Volkswagen subsidiary caused euphoria among Varta shareholders. The battered share price shot up by 21 percent to 10.79 euros on Friday. If a deal is ultimately reached, this would be a financial liberation for Varta, says Jürgen Molnar of RoboMarkets. Analyst William Mackie from Kepler Cheuvreux explained that Varta could free up capital and earn money with the sale. However, the company still needs to do more to get back on its feet financially.

Varta explained that a restructuring report, which is the prerequisite for further financial injections, is still in progress. "The company is still in the process of working out options regarding potential recapitalization and financing measures," the statement said. "This confirms that Varta is still under pressure from banks to restructure its balance sheet and raise fresh capital" to deleverage, Mackie wrote.

(Report by Alexander Hübner, edited by Ralf Banser. If you have any queries, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and the economy) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).)