Continental to Sell ContiTech Business to Lone Star Funds in €4B Deal
Synopsis
SK Hynix is weighing a 0.5% underwriting fee ahead of its planned Nasdaq ADR listing, with book building set to begin on July 6.
Key Highlights
- Continental will divest its ContiTech business to Lone Star Funds for €4 billion ($4.57 billion).
- The deal consists of performance-related pay below €250 million.
- Continental anticipates cash proceeds from the transaction of approximately €3.1 billion.
- Asset sales worth up to €2.5 billion are expected to be paid out as dividends after the closing of the deal.
- The company will have a more focused approach towards its core tyres business after selling its non-core business.
Continental will pay up to €250 million more over the next few years based on performance after signing a deal to sell its ContiTech plastics and rubber business for €4 billion ($4.57 billion) to private equity firm Lone Star Funds.
The German auto parts company said it expected to take home roughly €3.1 billion in cash proceeds from the deal, subject to ordinary adjustments.
Sale Enables Strategic Focus on Tyres
The sale offers a chance for Continental to concentrate again on core businesses with tyres, but the massive carmaker said the outlook for its global Volkswagen-facing tyres branch remained unchanged. The company also intends to pay roughly €2.5 billion back to shareholders following the completion of the transaction. Continental said it was now evaluating the impact of the sale on its outlook for this fiscal year.
ContiTech Restructuring Continues
The divestment wraps up several years of restructuring at ContiTech, which has been under some pressure in recent times.
The division announced 3,000 job cuts in May, including 1,600 in Germany, and Continental alone had already laid out plans for annual savings of €150 million at the business starting in 2028. The transaction is expected to close by the end of 2026, subject to customary closing conditions, the company said.
Source: Reuters
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