Continental (CONG.DE): Conti sell MyCar Tyre & Auto for c.€250m - accretive to group margins & supportive of de-leveraging story

Continental has agreed to sell its Australian tyre and automotive retail business, MyCar Tyre & Auto, to Tuhu at an enterprise value of A$403m (€250m). MyCar Tyre & Auto is one of Australia's largest tyre retailing, vehicle servicing and automotive repair chains. It operates around 280 stores across Australia. We do not anticipate any material tax/transaction cost impacts from the deal and thus expect a rather clean ~€250m cash-in upon closing. We expect the deal will reduce group revenues by ~€200m-€250m, all from the APAC region, but will be accretive to group margins as the MyCar operations ran at below group margin. These steps further exemplify Conti's strategy to simplify the business and improve capital allocation discipline and on a FY25a Tire EBITDA of €2.6bn should support a c.0.1x ND/EBITDA debt reduction, which including the ContiTech transaction should take FY27e ND/EBITDA down to <1.5x. We reach our target price using a blend of an assumed SOTP valuation of EUR78 and a 10