Frankfurt (Germany) (AFP) – German auto supplier Continental announced Saturday a four-billion-euro ($4.6-billion) deal to sell a division to a US investment group, the latest move in a major restructuring. Continental, which has been struggling amid a crisis in the wider European auto sector, has been slimming down its operations to focus on its traditional tyre business.
The group has signed an agreement to sell its ContiTech division, which makes plastic and rubber products for industrial clients, to private equity firm Lone Star Funds, according to a statement. As well as the four-billion-euro sale price, Continental could receive up to 250 million euros more in coming years, depending on the business’s performance. “With the planned sale of ContiTech, Continental is completing its strategic realignment,” it said. The deal should be finalised by the end of 2026.
Some of the funds from the sale will be used to pay down debt, while around 2.5 billion euros will be distributed to shareholders, it added. The IGBCE union, which represents the division’s workers, said it had opposed the sale but was not ultimately able to stop it. Francesco Grioli, a union representative and member of Continental’s supervisory board, urged dialogue with the new owner and voiced opposition to any new potential job cuts. “This will meet with our determined resistance,” he said.
ContiTech has around 20,000 employees at some 60 sites globally, and last year generated sales of around six billion euros. Continental last year spun off a division focused on car components including braking systems and sensors as a separate entity, called Aumovio. The group has also announced thousands of job cuts in recent years, along with other auto suppliers and manufacturers in Germany. The sector is facing fierce Chinese competition, weak demand in key markets, and a troubled shift to electric vehicles.
© 2024 AFP
