German defense contractor Rheinmetall has agreed to sell its Power Systems automotive division to Munich-based industrial group AEQUITA for a provisional 350 million euros ($404.1 million).
The deal will transfer a subsidiary that generated approximately 2 billion euros ($2.3 billion) in sales in 2025 and employs about 6,250 people internationally.
Under the procurement terms, AEQUITA will continue operating the business under the Pierburg, Kolbenschmidt, and Motorservice brands.
The acquisition excludes several assets, including Rheinmetall’s stake in Dermalog SensorTec, three KS Huayu AluTech sites in Germany, and Pierburg’s Abadiano plant in Spain, which will gradually transition from civilian to military production.
Rheinmetall expects the transaction to trigger additional impairment charges of about 200 million euros ($230.9 million).
The takeover is expected to close in the fourth quarter of 2026, pending regulatory approval.
Shift Amid Defense Boom
Rheinmetall has steadily reduced its civilian operations as European defense spending rises following Russia’s invasion of Ukraine in 2022.
Part of that move is an announcement in late 2025 classifying its Power Systems segment as a discontinued operation, revealed after divestiture of its piston manufacturing activities in 2024.
The company noted that worsening conditions in the automotive sector also influenced the final terms of the agreement with AEQUITA.
“This is a significant milestone in the company’s history,” Rheinmetall CEO Armin Papperger stated, referring to the latest business decision. “We are focusing on the high-margin business with military customers, where we have excellent growth opportunities.”
“The internationally successful industrial holding company combines extensive experience in the industrial and automotive sectors with a focus on entrepreneurship, transformation and a long-term perspective,” he added.
