Blackstone Inc. and Japan's Yanmar Holdings Co. are considering bids for a majority stake in Volkswagen AG’s heavy diesel engine unit, Everllence SE, according to people familiar with the matter. The potential sale could value the industrial engine business at over €1 billion.

Volkswagen is offloading non-core assets to focus on electric vehicles and reduce debt. Everllence, formerly MAN Energy Solutions, builds large diesel engines for ships and power plants. A sale to a private equity firm and an industrial partner would secure the unit’s future and its global workforce.

Blackstone’s interest signals private equity’s appetite for industrial assets with stable cash flows. Yanmar’s involvement suggests strategic interest in marine and power generation markets. The deal’s outcome will hinge on valuations and regulatory approvals, setting a benchmark for similar industrial divestitures.