Continental said on Saturday it had signed an agreement ​to sell its ContiTech plastics and rubber ‌business to private equity firm Lone Star Funds for €4 billion ($4.57 billion), plus potential performance-based components of up to €250 ​million in subsequent years.

The German car parts supplier ​said it expects cash proceeds of about €3.1 ⁠billion from the sale, subject to customary adjustments.

Continental ​added that the planned divestment will allow the ​company to focus on its core tires business going forward.

Continental said it expects to distribute around €2.5 billion to shareholders after ​the completion of the transaction.

Continental is assessing ​the impact of the deal on the company's outlook for ‌the ⁠current fiscal year, it said.

The company added that the outlook for its tires business remains unaffected.
Continental had previously announced plans to save €150 million annually from 2028 ​at ContiTech.

The division ​has been ⁠under pressure, and, in May, cut 3,000 jobs, including 1,600 in Germany, adding ​that the sale could be completed ​by the ⁠end of 2026.

Reuters reported, citing sources, on Friday that the companies were nearing a deal on ContiTech, ⁠which ​makes rubber and plastic products for ​industrial clients.

-Reuters