Rheinmetall is selling its struggling automotive supply business to sharpen its focus on defense operations. The Power Systems division is being acquired by investment group Aequita for a preliminary purchase price of 350 million euros, the Duesseldorf-based group announced on Wednesday. However, the price remains subject to adjustment until the transaction closes, which is expected by year-end. The divestment will also result in additional impairments of approximately 200 million euros for Rheinmetall.

The Duesseldorf group had put the division, which has been grappling with declining sales and profits, up for sale. The unit, which manufactures components for the crisis-hit automotive industry, is no longer considered part of the core business. Rheinmetall intends to concentrate on its profitable and currently rapidly expanding defense segment.

Following the Russian invasion of Ukraine, the Western defense industry has been called upon to bolster armed forces - a trend from which Rheinmetall is benefiting. The shift in the US administration under President Donald Trump away from NATO and the planned withdrawal of US troops from Germany are further fueling European demand for weapons and ammunition. Rheinmetall recently secured further major military contracts. Romania, for instance, placed a large-scale order with the Duesseldorf firm for a defense package including tanks, ammunition, and naval vessels worth a total of approximately 5.7 billion euros. The Bundeswehr also awarded a contract for the delivery of more than 2,000 military trucks valued at over one billion euros.

(Report by Matthias Inverardi, edited by Myria Mildenberger. For inquiries, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and economics) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).)