Auto supplier Continental considers major restructuring, possible breakup

6 years, 9 months ago - 10 January 2018, Autoblog

Continental, a German-based auto supplier that makes everything from tires to safety components for many of the world's top automakers, may be headed for a voluntary breakup to better address the industry's shift to electric and self-driving vehicles.

Citing anonymous sources familiar with the early-stage discussions with advisors, Bloomberg reports that Continental AG could create a holding company for its various divisions and then list shares of the more profitable units such as tires, or combine some operations with rivals. That would mirror similar moves recently at industry behemoths Daimler AG, which plans to split up its three Mercedes-Benz units, and supplier Delphi, which recently changed its name to Aptiv to focus on self-driving technology and spun out Delphi Technologies to focus on traditional engine components.

Investors have generally reacted positively to such breakups and say Continental could become more free to expand or make acquisitions in fields like electric mobility and autonomous driving technology.

Continental is one of the world's largest automotive suppliers with annual revenues of €44 billion ($52.5 billion) and a market capitalization of €50.2 billion ($59.85 billion). It has two main divisions: automotive, which makes chassis and safety components, interiors and large powertrains; and its rubber business, which includes its tire brand and ContiTech, which makes conveyor belts and chain-tracks for off-road vehicles.