South African auto parts and energy storage products maker Metair Investments Ltd, which aimed to acquire Slovenia car battery producer TAB, has withdrawn its offer, blaming currency exchange volatility.
Metair announced it was walking away from what it described as “a once-in-a-lifetime opportunity” to buy TAB (Tovarna Akumulatorskih Baterijd.d.) citing the soaring price it would have to pay in S.African rand as its value weakened against the euro.
In June, Johannesburg-based Metair entered into exclusive takeover talks with TAB (Tovarna Akumulatorskih Baterijd.d.) of Mežica, Slovenia, planning to purchase the European firm for around Eur.300m.
The deal, allowing Metair to enter Europe’s expanding EV power supply business, would see the group acquiring TAB and three plants in Macedonia and Slovenia, along with its European automotive aftermarket battery distribution network and global industrial battery business.
However, the proposed takeover price, equivalent to R4.43 billion in June, soared last month, with the escalating rand/euro exchange rate of R16.61, now valuing TAB at almost R5 billion.
Metair chief executive officer Theo Loock made clear he was disturbed by the soaring price. “We have a figure for the asset which we have not disclosed to the market. The rand price of the asset is (now) beyond the level we are comfortable with,” he said.
The rand price of the transaction has risen because of the volatility in emerging market currencies.
The South African group saw this acquisition as “a value-enhancing transaction” and during the period of its exclusive offer for TAB, due to end on 1 October, was conducting due diligence of the business.
Loock explained that his group has chosen to focus instead on its existing Turkish batteries subsidiary Mutlu Akü in Tuzla, Istanbul which had increased car battery exports by 28% and improved its performance in the first half of 2018.
This performance was achieved despite the recent ill effects of emerging market currency volatility, hitting the Turkish lira particularly badly. Metair is proritising its efforts on maintaining Mutlu’s strong performance through the second half of this year and mitigating the impact of the currency exchange uncertainty.
Metair’s chief executive suggested another company is likely to acquire TAB soon and that the Slovenian business is unlikely “to be available (again) for a long time”. “Such opportunities come along once in a lifetime,” Loock added.
Privately-owned TAB, which generated an annual profit of Eur 22.6m on revenue worth Eur 270m in 2017, will still consider other strategic cooperation. “Our intention is to continue our planned independent development path of the company, while at the same time we remain open for talks on strategic cooperation in the industry,” stated its director and co owner Bogomir Auprih.