(Bloomberg) — Bankers are engaged on debt packages of round €2.5 billion ($2.9 billion) to again a possible acquisition of Continental AG’s industrial ContiTech unit, as a highly-anticipated gross sales course of kicks off.
Data memorandums on the sale, run by Deutsche Financial institution AG and Perella Weinberg Companions, went out final week, in response to individuals accustomed to the deal, who requested to not be recognized as a result of the matter is personal. Potential patrons are anticipated to submit first spherical bids in an public sale subsequent month, the individuals added.
The sale of the unit, which makes merchandise resembling conveyor belt programs and agricultural hoses, is predicted to achieve round €4 billion to €5 billion, the individuals mentioned.
The launch of ContiTech marks the second multi-billion euro industrial carveout in Germany this yr as giant corporates concentrate on core operations. Carmaker Volkswagen AG just lately began the sale of a majority stake in its heavy diesel engine unit Everllence SE, which might fetch greater than €5 billion, Bloomberg beforehand reported.
A number of of the personal fairness suitors, resembling EQT AB, CVC Capital Companions Plc, EQT AB, KPS Capital Companions and Blackstone Inc., could take a look at each property earlier than deciding which one to pursue, the individuals mentioned. Some suitors could want the power to purchase all of ContiTech in comparison with only a sizeable stake in Everllence, among the individuals mentioned.
M&A exercise is selecting up once more this yr after a powerful end to 2025. Leveraged finance bankers, eager for a minimize of among the most profitable charges in funding banking, have been vying for roles on the multi-billion greenback financings underpinning these offers which can be set to launch on each side of the Atlantic within the subsequent few months.
The bankers engaged on the ContiTech sale have began to place collectively debt packages of about €2.5 billion, equal to round 4.25 occasions the unit’s approximate €600 million in earnings earlier than curiosity, taxes, depreciation and amortization, the individuals mentioned.
The financing might come within the type of leveraged loans and excessive yield bonds, denominated in euros and {dollars}, they added.
Final month Bloomberg reported Continental’s ContiTech unit was set to overlook targets due to weak demand and different bills, elevating doubts in regards to the value the division will fetch.
A spokesperson for Continental confirmed that the gross sales course of would start this month, however declined to supply any commentary on the financing. A consultant of Perella declined to remark. Deutsche Financial institution didn’t instantly reply to a request for remark.
Offloading ContiTech is the ultimate step within the German tire maker’s breakup plan that included itemizing its auto components enterprise Aumovio SE.
–With help from Eyk Henning.
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