Continental sells ContiTech to Lone Star Funds for €4 billion

Continental has sold its ContiTech group sector to an affiliate of Lone Star Funds for €4 billion. The transaction also includes performance-based components of up to €250 million in subsequent years.

The sale of its industrial business is the final step in Continental’s realignment. Once completed, the DAX-listed company will become a pure-play tyre manufacturer for the first time in its history. The transaction is subject to regulatory approval.

After taking into account transferred net liabilities, particularly pension and leasing commitments, Continental said it expects a cash inflow from the transaction of around €3.1 billion.

Around €2.5 billion is expected to be used for a special dividend or for a combination of a special dividend and share buybacks.

Continental said it will also continue to strengthen its capital structure. Lone Star Funds will take over all of ContiTech’s business operations worldwide.

“The sale of ContiTech marks the beginning of a new era as a pure-play tyre manufacturer,” said Continental CEO Christian Kötz. “As announced, our shareholders will participate in the proceeds from the sale. We will also continue to improve our solid capital structure.”