Bankers Prepare €2.5 Billion Debt Package for ContiTech Acquisition as Sale Process Commences
Financial institutions are actively working on debt packages totaling approximately €2.5 billion (equivalent to $2.9 billion) to facilitate the potential acquisition of Continental AG's industrial ContiTech unit. This development comes as the highly-anticipated sales process officially kicks off, marking a significant transaction in the European industrial sector.
Sales Process Details and Timeline
According to sources familiar with the matter who requested anonymity due to the private nature of the discussions, information memorandums regarding the sale were distributed last week. Deutsche Bank AG and Perella Weinberg Partners are managing the sales process, with potential buyers expected to submit their initial bids during an auction scheduled for next month.
The ContiTech unit, which manufactures specialized industrial products including conveyor belt systems and agricultural hoses, is projected to command a sale price ranging between €4 billion and €5 billion. This valuation reflects the unit's strategic position in the industrial manufacturing sector despite recent performance challenges.
Germany's Industrial Carveout Trend
The launch of the ContiTech sale represents the second multi-billion euro industrial carveout in Germany this year, as major corporations increasingly focus on streamlining their core operations. This trend follows Volkswagen AG's recent initiation of a sale process for a majority stake in its heavy diesel engine unit Everllence SE, which could potentially generate more than €5 billion according to previous reports.
Several prominent private equity firms, including EQT AB, CVC Capital Partners Plc, KPS Capital Partners, and Blackstone Inc., are reportedly evaluating both assets before determining which opportunity to pursue. Industry observers note that some suitors may prefer the opportunity to acquire the entirety of ContiTech rather than just a substantial stake in Everllence, providing them with greater operational control and strategic flexibility.
Financing Structure and Market Context
The bankers involved in the ContiTech transaction have begun structuring debt packages worth about €2.5 billion, which translates to approximately 4.25 times the unit's estimated €600 million in earnings before interest, taxes, depreciation, and amortization (EBITDA). This financing is expected to comprise leveraged loans and high-yield bonds denominated in both euros and dollars, providing flexibility for international investors.
This transaction emerges against a backdrop of renewed merger and acquisition activity following a strong conclusion to 2025. Leveraged finance bankers, eager to participate in some of the most lucrative fee-generating opportunities in investment banking, have been competing for roles in the multi-billion dollar financings supporting these major deals. Significant transactions are anticipated to launch on both sides of the Atlantic in the coming months.
Performance Considerations and Corporate Strategy
Recent reports indicated that Continental's ContiTech unit was likely to miss performance targets due to weakened demand and additional expenses, raising questions about the final valuation the division might achieve. Despite these challenges, the sales process proceeds as planned, reflecting Continental's strategic commitment to restructuring.
A spokesperson for Continental confirmed that the sales process would commence this month but declined to provide specific commentary regarding the financing arrangements. A representative from Perella Weinberg Partners similarly declined to comment, while Deutsche Bank did not immediately respond to requests for comment.
The divestment of ContiTech represents the final phase in the German tire manufacturer's comprehensive breakup strategy, which previously included the listing of its automotive parts business Aumovio SE. This strategic realignment allows Continental to concentrate resources on its core operations while unlocking value from non-core assets.
