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On Friday, Michigan-based thermal management technologies company Gentherm (NASDAQ: THRM ) announced that it is buying Deutsche Balaton's minority stake in Germany's W.E.T. Automotive Systems, preparatory to taking over the entire company.
Gentherm already owns a majority interest in W.E.T., a publicly traded German automotive thermal control and electronic components company. Simultaneously with the current purchase, Gentherm will also acquire a 23,044-share stake in W.E.T., which Deutsche Balaton will obtain from a third party. Thus, the instant transaction holds the potential to put approximately 90% of W.E.T.'s shares in Gentherm's hands. This purchase is scheduled to close within the next few days.
The ultimate goal of the purchase, however, as described in a statement on the transaction, is "to continue the process of combining into one entity, integrating our broad array of capabilities." So as its final step, Gentherm plans to offer to buy the remaining 10% of W.E.T.'s shares outstanding from their owners for a further $37 million.
In the instant transaction, Gentherm will be paying $7.5 million cash and issuing 3.3 million Gentherm shares, in exchange for Deutsche Balaton's 442,253-share, 13.8% interest in W.E.T. For the purposes of this transaction, the parties are agreeing to value Gentherm's shares at $13 each, implying a $50.4 million value on the purchase of Deutsche Balaton's stake.
Investors like the plan as a whole and bid up Gentherm's own shares 6.6% to $15.46 in Friday trading.