Continental to sell ContiTech unit to Lone Star Funds for $4.6 billion
Continental's Strategic Divestment of ContiTech
Details of the Sale Agreement
July 4 (Reuters) - Continental said on Saturday it had signed an agreement to sell its ContiTech plastics and rubber business to private equity firm Lone Star Funds for €4 billion ($4.57 billion), plus potential performance-based components of up to €250 million in subsequent years.
The German car parts supplier said it expects cash proceeds of about €3.1 billion from the sale, subject to customary adjustments.
Focus on Core Business
Continental added that the planned divestment will allow the company to focus on its core tires business going forward.
Shareholder Returns
Continental said it expects to distribute around €2.5 billion to shareholders after the completion of the transaction.
Financial and Operational Impact
Assessment of Fiscal Outlook
Continental is assessing the impact of the deal on the company's outlook for the current fiscal year, it said.
The company added that the outlook for its tires business remains unaffected.
Cost-Saving Initiatives
Continental had previously announced plans to save €150 million annually from 2028 at ContiTech.
Job Cuts and Timeline
The division has been under pressure, and, in May, cut 3,000 jobs, including 1,600 in Germany, adding that the sale could be completed by the end of 2026.
Background and Additional Information
Deal Progress and Industry Context
Reuters reported, citing sources, on Friday that the companies were nearing a deal on ContiTech, which makes rubber and plastic products for industrial clients.
($1 = 0.8745 euros)
(Reporting by Mihika Sharma and Gnaneshwar Rajan in Bengaluru; Editing by Sharon Singleton and Ros Russell)
