HANOVER — German automotive supplier Continental said on Saturday it had agreed to sell its ContiTech plastics and rubber business to private equity firm Lone Star Funds in a transaction valued at €4 billion ($4.57 billion), with potential additional performance-based payments of up to €250 million, completing another step in its strategic refocusing on its core tire operations.
The company said it expects cash proceeds of about €3.1 billion from the sale, subject to customary purchase price adjustments. Continental added that it intends to return around €2.5 billion to shareholders after the transaction closes, while using the divestment to simplify its business structure following broader restructuring efforts.
The transaction remains subject to regulatory approvals, including antitrust clearance, and other customary closing conditions. Continental said it expects the sale to be completed by the end of 2026.
The Hanover-based company said the disposal would allow it to concentrate on its tire business, which it views as its core operation. It is assessing the impact of the transaction on its financial outlook for the current fiscal year but said its guidance for the tire business remains unchanged.
Continental has been reshaping its portfolio amid pressure on parts of its industrial operations. The ContiTech division, which manufactures rubber and plastic products for industrial customers, previously announced plans to generate annual savings of €150 million from 2028. In May, the unit said it would eliminate about 3,000 jobs, including around 1,600 positions in Germany, as part of cost-cutting measures.
The agreement follows Continental's announcement a day earlier that its management and supervisory boards had approved a transaction framework with Lone Star based on the same enterprise valuation, although a binding agreement had not yet been signed at that stage. Reuters had also reported on Friday, citing people familiar with the matter, that the companies were nearing a deal.
The sale marks the latest move in Continental's multi-year restructuring aimed at sharpening its focus on higher-margin businesses. The company said further details on the financial effects of the transaction would be provided as it completes its assessment, while the closing timetable remains dependent on regulatory approvals and other standard conditions.
