Continental announced on Saturday that it has entered into a sale agreement to transfer its ContiTech plastics and rubber unit to Lone Star Funds for an upfront price of c4 billion, with additional performance-based payments as high as c250 million payable in later years. The German car parts supplier said it expects to receive roughly c3.1 billion in cash from the transaction, subject to the usual closing adjustments.
The company framed the planned divestment as a step to sharpen its strategic focus on its primary tires business. Continental said it intends to distribute approximately c2.5 billion to shareholders following completion of the sale, reflecting a sizable return of capital enabled by the transaction.
Management said it is currently assessing how the divestment will affect the companys outlook for the current fiscal year. At the same time, Continental made clear that the outlook for its tires business remains unchanged.
ContiTech has been under financial and operational pressure in recent months. Continental previously announced a plan to realize annual savings of c150 million at ContiTech starting in 2028. In May, the division implemented job reductions totaling 3,000 positions, including 1,600 roles in Germany. The company has indicated the sale could be finalised by the end of 2026.
News reports on Friday had indicated that the two parties were close to reaching a deal for ContiTech, which supplies rubber and plastic components to industrial customers. The deal price was quoted in euros; a conversion reference provided with the announcement indicated $1 equals 0.8745 euros.
Deal highlights
- Purchase price: c4 billion plus up to c250 million in contingent payments.
- Expected cash proceeds to Continental: about c3.1 billion, subject to adjustments.
- Planned shareholder distribution: roughly c2.5 billion after transaction close.
The transaction removes ContiTech from Continentals portfolio and concentrates the companys business profile on tyres. Continental will continue to evaluate the effects of the sale on its full-year guidance while maintaining that the tyre segment outlook is unaffected.
Completion timing, workforce changes already enacted at ContiTech, and the previously announced c150 million annual savings target at the division remain salient elements as the deal progresses toward a potential close by the end of 2026.