NORTHVILLE, Mich. and HEIDELBERG, Germany – Gentherm Inc., a developer of innovative thermal management technologies, has reached an agreement to acquire all the shares of W.E.T. Automotive Systems AG (W.E.T.) owned by Heidelberg, Germany-based Deutsche Balaton AG, the largest minority shareholder of W.E.T.
Gentherm says the acquisition of the shares is a major step in completing its acquisition of W.E.T., a publicly traded German automotive thermal control and electronic components company. Deutsche Balaton remains indirectly a shareholder of W.E.T. via Gentherm.
Upon completion of the transaction, Deutsche Balaton has agreed to withdraw its legal case opposing the registration of a Domination and Profit and Loss Transfer Agreement (DPLTA), which, under German law, would essentially allow Gentherm and W.E.T. to be managed as one operational entity.
Gentherm initially acquired a majority interest in W.E.T. in May 2011 to create a larger and more global company with a broad range of thermal products and manufacturing capabilities.
"The purchase of Deutsche Balaton’s shares will enable Gentherm to more completely achieve the synergies inherent in the combined companies," said Gentherm President and CEO Daniel Coker.
The transaction involves the issuance of 3.3 million Gentherm common shares and payment of approximately $7.5 million in cash in exchange for Deutsche Balaton’s 442,253 shares in W.E.T. (or 13.8 percent of the total outstanding W.E.T. shares). For a limited time, the holders of the Gentherm Series C Preferred Stock have the right to purchase up to 30 percent, in the aggregate, of any common share offering. Such holders have all agreed to waive those rights in connection with the stock issuance to Balaton described above. Closing of the transaction is expected to occur within a few days.
"The share purchase will allow Gentherm and W.E.T. to continue the process of combining into one entity, integrating our broad array of capabilities and fulfilling the promise of the acquisition we have always envisioned," Coker said. "Upon the registration of a DPLTA, we will be able to accelerate this process and better serve our customers and generate greater shareholder value without the ongoing distraction of legal issues associated with the combination of the two companies.
"Upon closing of the transaction, Deutsche Balaton, which has proven to be a savvy investor in W.E.T., having held its position for 10 years, will be a significant European investor in Gentherm," added Coker. "This fits well with our strategy to expand our global shareholder base to include investors located outside the U.S., and we are pleased to have Deutsche Balaton as an equity partner."
"We have always believed in W.E.T. and recognized it as a very valuable asset in our portfolio. We are convinced that the combination of Gentherm and W.E.T. will create an extraordinary value opportunity and are enthusiastic about being able to participate," said Thomas Zours, chairman of the supervisory board at Deutsche Balaton.
In connection with the share purchase from Deutsche Balaton, Gentherm has agreed to offer to acquire, upon registration of the DPLTA, the remaining shares of W.E.T. held by other minority shareholders. Such remaining shares represent approximately 10 percent of the total outstanding W.E.T. shares. Gentherm will offer a total payment of €85 per W.E.T. share, or an aggregate of approximately $37 million in cash.
