Continental to sell ContiTech unit to Lone Star Funds for $4.6 billion

July 4 (Reuters) - Continental said on Saturday it had signed an agreement to sell its ContiTech plastics and rubber business to private equity firm Lone Star Funds for €4 billion ($4.57 billion), plus potential performance-based components of up to €250 million in subsequent years.

The German car parts supplier said it expects cash proceeds of about €3.1 billion from the sale, subject to customary adjustments.

Continental added that the planned divestment will allow the company to focus on its core tires business going forward.

Continental said it expects to distribute around €2.5 billion to shareholders after the completion of the transaction. 

Continental is assessing the impact of the deal on the company's outlook for the current fiscal year, it said. 

The company added that the outlook for its tires business remains unaffected. 

Continental had previously announced plans to save €150 million annually from 2028 at ContiTech.

The division has been under pressure, and, in May, cut 3,000 jobs, including 1,600 in Germany, adding that the sale could be completed by the end of 2026.

Reuters reported, citing sources, on Friday that the companies were nearing a deal on ContiTech, which makes rubber and plastic products for industrial clients. 

($1 = 0.8745 euros)

(Reporting by Mihika Sharma and Gnaneshwar Rajan in Bengaluru; Editing by Sharon Singleton and Ros Russell)