Rheinmetall sells struggling auto division to Aequita in €350 million deal

BERLIN, June 3 (Reuters) - Germany's Rheinmetall will sell its struggling automotive unit to Munich-based investment firm Aequita for about €350 million ($406 million), it said on Wednesday, in one of its final steps to focus on defence.

Rheinmetall, whose business has boomed since the start of the Ukraine war as Europe boosts defence spending, has been seeking a buyer for its Power Systems division since last year and classified it as a discontinued operation in December 2025.

The unit will be sold for a provisional €350 million, subject to potential adjustment when the deal closes, expected in the fourth quarter.

The sale will trigger additional impairment charges of about €200 million, after Rheinmetall booked a non-cash charge of around €350 million in December linked to the business.

"In particular, the further deterioration in the business situation in the automotive sector had an impact on the circumstances and terms of the final agreement," the company said in a statement.

Aequita, an investment firm that buys and restructures companies, plans to retain the roughly 6,250 employees in the unit worldwide, Rheinmetall added.

"The company is an excellent addition to our automotive division, which will now generate revenues of approximately €5 billion," said Axel Geuer, chairman and co-CEO of Aequita.

He added Aequita would support the business's long-term development and seek synergies across its automotive portfolio.

Excluded from the sale are three German locations of aluminium casting specialist KS Huayu AluTech, a stake in automotive sensor joint venture Dermalog SensorTec and car parts maker Pierburg's Abadiano plant in Spain, Rheinmetall said.

($1 = 0.8617 euros)

(Reporting by Miranda Murray and Linda Pasquini. Editing by Ludwig Burger and Mark Potter)