VW unearths AI bounty, and a governance headache

Volkswagen AG

23/06/2026 13:01

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
By Neil Unmack
LONDON, June 23 (Reuters Breakingviews) - In an ideal world, Volkswagen VOWG.DE wouldn’t be selling Everllence. While the Lamborghini-to-Skoda group is grappling with brutal Chinese competition, its unit that makes tanker engines offers stable growth, respectable margins, and upside from AI data centres. Scope for a valuable payday offsets the deal's quirky governance.
Private equity has long eyed Everllence, formerly known as MAN Energy Solutions, even though it has been largely ignored by equity analysts. The division has a powerful position in the 2-stroke engines used in massive tankers. VW’s decision to finally sell, forced by the need to simplify its sprawling empire and raise cash, has come at an opportune time; the boom in data centres means Everllence’s engines are also seen as a flexible alternative to in-demand gas turbines.
There are some wrinkles. For one, VW has opted to retain a 49% share, and the unions that sit on its board are keen to secure commitments from the buyers to keep the business intact and preserve jobs. That puts the potential upside of a breakup off the table, and could complicate future management.
In an extra twist, two of VW’s largest shareholders — Porsche SE PSHG_p.DE, the family vehicles of the Porsche and Piëch families, and Qatar Investment Authority, are buddying up with one of the Everllence bidders, EQT EQTAB.ST. To make things fair for fellow bidders CVC Capital Partners CVC.AS and Bain Capital, EQT bid-aligned representatives on the VW board, including VW Chairman Hans Dieter Pötsch, will not be able to vote on the final deal. Without the Porsche and Qatari board members, what’s left of the supervisory board will be dominated by labour representatives or public investors. They may care more about jobs than shareholder returns.
VW has a workaround. In a move reminiscent of London property auctions, bidders will submit final offers via sealed envelopes to be opened simultaneously, with a winner then picked. That might ensure the highest bid wins. But the deal will still need approval by the supervisory board.
A successful sale would be a coup for VW, especially if Everllence were to go to an external bidder with no links to the carmaker. Regardless of who wins, the unit could fetch perhaps €8.5 billion, according to one person familiar with the matter, nearly 21% of VW’s market value.
At that price, a bidder would need to work hard to get a 20% private-equity style return. The winning buyout outfit might need to more than double revenue growth to over 4%, and boost the EBITDA margin from over 14% last year to 17%, according to a Breakingviews calculation. That assumes the buyer funds nearly half their purchase with debt, and sells after five years on the same EBITDA multiple of around 12 times.
Arguably, an unshackled breakup might have delivered more. Even so, VW’s engine sale could still be a good outcome in an imperfect world.
     
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CONTEXT NEWS
Volkswagen is expected on June 24 to pick a winner for its Everllence unit, which makes engines used in shipping as well as data centres. The group’s supervisory board will still need to approve the deal.
The three bidders are CVC Capital Partners, Bain Capital and EQT. The latter group is partnering with Volkswagen’s top shareholders Porsche SE and Qatar.

(Editing by George Hay; Production by Streisand Neto)
((For previous columns by the author, Reuters customers can click on UNMACK/neil.unmack@thomsonreuters.com))