Rheinmetall sells off civilian arm to focus on defence

Rheinmetall has finalised the sale of its civilian Power Systems division to the Munich-based industrial group AEQUITA.

The two parties have signed a purchase agreement worth a provisional 350 million euros for all of the shares, with the figure subject to the usual closing adjustments and the transaction expected to close in the fourth quarter of 2026 once regulatory approvals have been granted. The division being sold, which still generated around 2 billion euros in sales last year, has been treated as a “discontinued operation” in Rheinmetall’s accounts since the final quarter of 2025, and AEQUITA has said it intends to retain all of the roughly 6,250 employees working at the businesses being transferred.

Under its new owner, the operation will continue to trade under its long-established names of Pierburg, Kolbenschmidt and Motorservice, three of the most familiar suppliers to the European automotive industry, with the trademark rights staying with the business and AEQUITA running it as a standalone entity. The deal is the decisive step in a transformation Rheinmetall has been signalling for some years, having already sold off its large- and small-bore piston operations in 2023 and 2024 as the company began tilting steadily towards the booming market for military equipment in the wake of Russia’s invasion of Ukraine.

The Rheinmetall chief executive Armin Papperger described the agreement as “a significant milestone in the company’s history”, saying his firm was concentrating on the higher-margin defence business where it sees the greatest room to grow, while AEQUITA’s chairman and co-chief executive Axel Geuer said his group was “very proud” to have been chosen and that the acquisition would slot neatly into its existing portfolio, lifting the revenues of its automotive segment to roughly 5 billion euros.

Not everything is going across with the deal, and three German sites belonging to KS Huayu AluTech, in Neckarsulm, Walldürn and Langenhagen, are excluded from the sale and will remain inside Rheinmetall as a joint venture for the time being, still treated as a discontinued operation in the accounts.

Dermalog SensorTec, also originally part of the civilian portfolio, is being kept permanently and folded into Rheinmetall’s Weapon and Ammunition division, with its employees staying at their Neuss site. The Spanish plant of Pierburg S.A. in Abadiano, in the Basque Country, is also being retained, and will run for a transitional period as a hybrid site producing both civilian and military goods before switching fully to military output.