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

(Bloomberg) -- Bankers are working on debt packages of around €2.5 billion ($2.9 billion) to back a potential acquisition of Continental AG’s industrial ContiTech unit, as a highly-anticipated sales process kicks off.

Information memorandums on the sale, run by Deutsche Bank AG and Perella Weinberg Partners, went out last week, according to people familiar with the deal, who asked not to be identified because the matter is private. Potential buyers are expected to submit first round bids in an auction next month, the people added.

The sale of the unit, which makes products such as conveyor belt systems and agricultural hoses, is expected to reach around €4 billion to €5 billion, the people said.

The launch of ContiTech marks the second multi-billion euro industrial carveout in Germany this year as large corporates focus on core operations. Carmaker Volkswagen AG recently started the sale of a majority stake in its heavy diesel engine unit Everllence SE, which could fetch more than €5 billion, Bloomberg previously reported.

Several of the private equity suitors, such as EQT AB, CVC Capital Partners Plc, EQT AB, KPS Capital Partners and Blackstone Inc., may look at both assets before deciding which one to pursue, the people said. Some suitors may prefer the ability to buy all of ContiTech compared to just a sizeable stake in Everllence, some of the people said.

M&A activity is picking up again this year after a strong finish to 2025. Leveraged finance bankers, keen for a cut of some of the most lucrative fees in investment banking, have been vying for roles on the multi-billion dollar financings underpinning these deals that are set to launch on both sides of the Atlantic in the next few months.

The bankers working on the ContiTech sale have started to put together debt packages of about €2.5 billion, equivalent to around 4.25 times the unit’s approximate €600 million in earnings before interest, taxes, depreciation and amortization, the people said. 

The financing could come in the form of leveraged loans and high yield bonds, denominated in euros and dollars, they added. 

Last month Bloomberg reported Continental’s ContiTech unit was set to miss targets because of weak demand and other expenses, raising doubts about the price the division will fetch.

A spokesperson for Continental confirmed that the sales process would begin this month, but declined to offer any commentary on the financing. A representative of Perella declined to comment. Deutsche Bank didn’t immediately respond to a request for comment.

Offloading ContiTech is the final step in the German tire maker’s breakup plan that included listing its auto parts business Aumovio SE. 

--With assistance from Eyk Henning.

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