Battery maker Varta wants to establish partnerships in its automotive and portable battery divisions.
Varta is in 'intensive negotiations' with potential partners to strengthen its business in Asia or the USA, said CEO Georg Prilhofer.
Pressure to consolidate is just beginning in the automotive battery sector, Prilhofer said. Eventually he expects automotive battery standards to converge, which will encourage a concentration of buying power among a few automakers.
Varta of Hannover, Germany, has a longstanding technical exchange agreement with Johnson Controls, a market leader in automotive batteries in North America.
But Prilhofer ruled out US battery maker Exide as a potential partner at the moment 'on several grounds' - and especially because Exide is under US court control while it tries to work its way out of bankruptcy.
And in Europe, linkage between Exide's automotive battery business and Varta's would be impossible on antitrust grounds, he said. More than 50 percent of Exide's battery sales are in Europe. The region accounts for nearly 80 percent of Varta's sales.
Prilhofer stressed that any future alliance would be formed at subsidiary level, and would not involve the parent company merging with a rival battery maker.
The automotive and portable battery units are Varta's biggest. Total company sales were E285 million in the first quarter, up 9 percent year on year. Automotive sales contributed E150 million, up from E141 million. Sales of portable batteries such those used in cameras and flashlights rose 13 percent to E106 million.
Sales in Varta's third business area, microbatteries, rose 9 percent in the first quarter to E29 million.
But Prilhofer said Varta's margins are being squeezed by the rising cost of lead, the major raw material used in batteries.
Varta is 92 percent owned by DB Investor, Deutsche Bank's industrial and private equity holding company. Prilhofer said DB Investor's majority stake in Varta has made negotiations about potential partnerships easier.
He added: 'The flexibility is naturally a lot bigger than when there was a free float of 60 percent.'