German battery manufacturer VARTA files for insolvency

Stuttgart (dpa) - The German battery manufacturer VARTA confirmed on Friday that it has filed for preliminary insolvency under self-administration, in a bid to secure its economic future and enable the sustainable continuation of its operations. 

According to the company, the filing affects not only VARAT group's parent company headquartered in southern Germany, but also its operating subsidiaries.

The company cited significantly deteriorating market conditions, weaker demand, negative currency exchange rate effects and, most recently, the decision by a key anchor customer to end its partnership with VARTA as the main causes of the renewed crisis.

The move follows the news earlier this week that the company based near the southern German town of Ellwangen is facing a potential break-up because major investors want to divest the household battery business.

The so-called ad-hoc creditor group, including Deutsche Bank and the financial investors RBC BlueBay, Blantyre and Whitebox, justified its actions by citing the company's strained financial situation.

An independent analysis revealed that VARTA urgently needs additional funds in the mid-double-digit millions. Despite intensive discussions, no one was willing to provide further capital.

According to the company, it employs around 3,260 people, many of them at its Ellwangen headquarters.

VARTA last published its financial figures in 2024. At that time, the company generated sales of around €793 million ($903 million) and a loss of €64.5 million.

In addition to its well-known household batteries, the group produces, among other things, microbatteries for hearing aids and energy storage systems.

Restructuring meant to avoid insolvency

In 2024, VARTA restructured itself under the German Restructuring and Business Restructuring Act to avert insolvency. Existing shareholders lost their stakes and creditors waived a portion of their claims.

At the beginning of April last year, VARTA declared the restructuring complete and considered itself back on track.

However, the economic situation deteriorated again. A plant with around 350 employees in Nördlingen in Bavaria is slated to close later this year. Apple, the site's most important customer, had withdrawn, it was announced in May. New major customers were lacking.

VARTA will continue to produce button cell batteries for the US company's wireless headphones there until November, but production is expected to shift to Asia after that.