Continental delays Vitesco spin-off, blaming market turmoil

FILE PHOTO: A tyre of German tyre company Continental is pictured before the annual news conference in Hanover, Germany,March 7, 2019. REUTERS/Fabian Bimmer

FRANKFURT (Reuters) – German car parts maker Continental (CONG.DE) said on Thursday it was postponing the planned spin-off of its powertrain unit Vitesco Technologies, citing ongoing economic uncertainty for the delay.

The spread of the coronavirus has hammered equity markets, playing havoc with valuations, a factor which has already led Italy’s CNH Industrial (CNHI.MI) to say it may need more time to spin off its Iveco trucks unit.

“The spin-off requires better market conditions,” Continental said in a statement.

The company said its shareholders will not be asked to sign off on the plans for a Vitesco spin-off at the annual general meeting on July 14 and the deal will not take place this year.

“We are now arranging the organizational and procedural requirements so that Continental and Vitesco Technologies are in a position to swiftly implement the spin-off with listing once the market environment is suitable. The decisive preparations for this will have been completed by the end of the year,” Vitesco Chief Executive Andreas Wolf said.

Vitesco warned in January that it faced margin pressure as it shifts its business beyond combustion engines, which make up 90% of revenues, to capture growth from electromobility.

Separately, German conglomerate Siemens (SIEGn.DE) on Thursday said it was sticking to its plans for spinning off its Siemens Energy unit.

Reporting by Arno Schuetze, Alexander Huebner and Joern Poltz; Writing by Edward Taylor; editing by Thomas Seythal and Susan Fenton

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