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The
company's shares plunged 20% after the issue was flagged by a
note from analysts at Commerzbank, which downgraded their
recommendation for the stock to Hold from Buy.
"If they do not react immediately after the deadline, we will
seek preliminary injunctions," a Varta spokeswoman said, adding
that Varta learned of the situation only in December.
Some stock traders also linked Varta's share price collapse to
lithium producer Livent <LTHM.N> cutting its earnings outlook on
Tuesday due to a downturn in prices of the battery metal.
Commerzbank cited a report of an active shortseller, which
uncovered that Chinese companies have successfully broken into
several of Varta's key accounts such as Samsung <005930.KS>,
Jabra, Sony <6758.T> and JBL.
"The Chinese second sources seem to have arisen as the market
demand was too strong for Varta to satisfy and its earbud
clients seem to have been afraid to lose market share with
supply from Varta only", the brokerage said.
Varta was taking legal steps against the alleged infringement by
Chinese producers EVE Energy Company and MIC-Power, it added.
The shortseller, dubbed "Black Mamba", additionally named
battery firms ZeniPower and Great Power as suppliers which are
encroaching on Varta's near-monopoly in supplying batteries for
so-called truly wireless stereo (TWS) earphones, one of its core
businesses.
"Without a monopoly on the premium TWS market, we believe that
the market's expectations of the value of Varta's entertainment
business are far too rosy", the shortseller said.
Short selling involves borrowing an asset and selling it with
the aim of buying it back at a cheaper price and making a
profit.
The Chinese firms had no immediate comment.
(Reporting by Arno Schuetze, editing by Thomas Escritt)
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