Germany’s Rheinmetall has agreed to sell its automotive business, the Power Systems division, as it focuses on becoming a pure-play defence company.

Munich-based investment firm Aequita is set to acquire the unit for a provisional purchase price of €350m ($406.8m).

The purchase agreement covers 100% of the shares in Power Systems. The transaction is expected to close in the fourth quarter of 2026, subject to approvals from the relevant regulatory authorities.

Rheinmetall said the final purchase price may vary from the provisional amount due to customary market adjustment mechanisms that will apply until completion of the deal.

The Power Systems division recorded approximately €2bn in sales during 2025 and has been reported as a discontinued operation since Rheinmetall’s fourth quarter 2025 results.

The sale follows earlier disposals of the company’s large-bore and small-bore piston businesses in 2023 and 2024 as part of its planned withdrawal from the automotive supplier sector.

Aequita said it intends to retain all around 6,250 employees currently working across the acquired operations worldwide.

Once the transaction is completed, the business will continue operating independently under its existing brands, including Pierburg, Kolbenschmidt and Motorservice, while retaining all associated trademark rights.

The deal does not include the three German sites of KS Huayu AluTech in Neckarsulm, Walldürn and Langenhagen.

These operations will remain within the Rheinmetall Group as a joint venture for the medium term and will continue to be classified as a discontinued operation.

Rheinmetall’s shareholding in Dermalog SensorTec will also remain within the group and will be incorporated into its Weapon and Ammunition division.

In addition, Pierburg’s facility in Abadiano, Spain, will remain under Rheinmetall ownership and continue operating as a hybrid civilian and military production site during a transition period.