Continental AG has announced that it is conducting a thorough evaluation of the potential spin-off of its Automotive group sector. This strategic move aims to create two independent companies, enabling the organisation to fully realise its value and growth potential in the rapidly evolving automotive market.
The Continental Executive Board plans to make a final decision on the spin-off in the fourth quarter of 2024. If the proposal is approved, it will be presented to the Annual Shareholders’ Meeting on 25 April 2025. Should shareholders give their consent, the spin-off will be completed by the end of 2025. The process is already in motion, with preparations underway.
Continental's CEO, Nikolai Setzer, highlighted the dynamic nature of the automotive industry as a driving force behind the decision. "Our strategy aims to increase our value creation. This involves systematically analysing how we can best position our group sectors for success," Setzer explained. "Markets and customers, especially in the automotive industry, have evolved extremely dynamically in recent months. Looking ahead, sharply fluctuating regional developments in the markets as well as the software-driven technology transformation will require even greater flexibility and entrepreneurial freedom. Against this backdrop, we are aiming to divide Continental into two independent companies."
Prof. Dr.-Ing. Wolfgang Reitzle, Chairman of the Supervisory Board, added, "A spin-off of Automotive has the potential to create competitive opportunities, enhance agility and increase transparency. As a strong, independent entity, Automotive would be able to harness its full potential for creating value. In addition, investors would be able to invest in a company focused specifically on automotive electronics."
Post-spin-off, the Automotive group, already consolidated into a single legal entity since 2022, would become an entirely independent company. It generated sales of approximately €20.3 billion in the last fiscal year and employs around 100,000 people. The group boasts significant expertise in innovative brake and comfort systems, sensor solutions, displays, and software development for software-defined and autonomous vehicles.
Meanwhile, the profitable Tires and ContiTech sectors will remain under the Continental umbrella. These sectors, which also employ around 100,000 people, had combined sales of approximately €20.8 billion last year. They are known for their globally successful tire business and innovative material solutions with an industrial focus, offering resilience against economic volatility through regional diversification and differentiated distribution channels.
Setzer emphasised the importance of considering all stakeholders in the process, including employees. "We will have the interests of all employees firmly in mind when conducting the detailed evaluation – they too would benefit from having two strong, independent companies."
As seen with the spin-off of Vitesco Technologies in September 2021, Continental shareholders would receive shares in the newly independent Automotive entity proportionate to their holdings in Continental
The proposed spin-off of Continental's Automotive group represents a significant shift in the company's structure, aimed at unlocking value and adapting to the evolving demands of the automotive market. The decision underscores Continental's commitment to flexibility and growth in an era of rapid technological advancements and market changes.
