Bankers Prep €2.5 Billion Debt as ContiTech Unit Sale Kicks Off

Core Viewpoint - The sale of Continental AG's industrial ContiTech unit is underway, with debt packages of approximately €2.5 billion ($2.9 billion) being prepared to support the acquisition process [1][6]. Group 1: Sale Process and Financials - Information memorandums for the sale, managed by Deutsche Bank AG and Perella Weinberg Partners, were distributed last week, with potential buyers expected to submit initial bids next month [2]. - The expected sale price for the ContiTech unit, which produces items like conveyor belt systems and agricultural hoses, is projected to be between €4 billion and €5 billion [2]. - The financing for the acquisition is anticipated to be structured as leveraged loans and high-yield bonds, available in both euros and dollars [6]. Group 2: Market Context and Competitors - The launch of the ContiTech sale represents the second significant industrial carveout in Germany this year, as companies like Volkswagen AG also pursue divestitures to concentrate on core operations [3]. - Several private equity firms, including EQT AB, CVC Capital Partners Plc, KPS Capital Partners, and Blackstone Inc., are considering both the ContiTech unit and Volkswagen's Everllence SE, with some preferring the option to acquire the entire ContiTech unit [4]. Group 3: Industry Trends - M&A activity is on the rise this year following a strong finish in 2025, with leveraged finance bankers eager to participate in lucrative financing roles for upcoming deals [5]. - The ContiTech sale is part of Continental's broader strategy to divest non-core assets, which also includes the planned listing of its auto parts business, Aumovio SE [8].