German automotive supplier Continental has agreed to sell its ContiTech business unit to private equity firm Lone Star Funds for an enterprise value of €4 billion (approximately $4.6 billion). The deal includes potential additional payments of up to €250 million ($286 million) tied to future performance.

ContiTech, which employs over 20,000 people globally and produces items like conveyor belts and vehicle interior materials, has faced a challenging market. Continental anticipates the sale will yield around €3.1 billion in cash proceeds. A portion of this will reduce debt, with an estimated €2.5 billion slated for distribution to shareholders.

This divestiture comes as Continental seeks to streamline operations amid market headwinds. The sale of ContiTech, which had previously announced a restructuring involving 3,000 job cuts to save €150 million annually, signals a strategic shift for the tire maker. Investors will monitor how Continental deploys the capital and addresses its core business segments.