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(Bloomberg) — Shares of auto supplier Aumovio started trading on the Frankfurt Stock Exchange following a split from Continental AG, as the German manufacturer refocuses on its tires division.
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Aumovio shares, which are debuting on Thursday under the symbol AMV0, traded at €35 ($41.28) apiece at the open. Continental opened at €55.48 as it traded for the first time without the right for investors to receive shares in the spinoff. Its stock had closed at €72.98 on Wednesday.
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Continental carved out its auto-parts unit and is looking to sell its industrial unit ContiTech next year as it refocuses on its tires business, reversing decades of expanding its portfolio. It’s one of several strategic shakeups reordering Europe’s automotive industry, which is contending with mounting trade hurdles, intensifying competition from China and high labor and energy costs in Europe.
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Continental’s peers ZF Friedrichshafen AG and Robert Bosch GmbH are closing factories, while automakers including Volkswagen AG’s premium brands Audi and Porsche are overhauling their lineups and pushing for additional cost cuts.
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Aumovio brings together Continental’s operations in sensors, brake systems and vehicle displays — areas that were once growth engines but have become harder to monetize. As automakers expand their own capabilities, margins that suppliers such as Aumovio could once command were hit.
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In recent years, car manufacturers have developed that capability internally, shrinking the role for external suppliers and strengthening their bargaining power, while at the same time creating an opening for pure software players. Aumovio cut costs and raised prices ahead of its debut, helping improve its profitability in the second quarter.
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Analysts had wide-ranging estimates for how to value the spinoff. Bloomberg Intelligence said in June the unit could be worth €6.5 billion using a sum-of-the-parts view, while Bernstein analysts valued the firm at about €4.2 billion in a note earlier this month.
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Spinoffs often see selling pressure in the first days of trading, as some investors who receive shares won’t be able to retain them due to constraints like index-inclusion.
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“We expect selling when Aumovio is separated, but see scope for margins to improve over time,” Jefferies analysts wrote in a note earlier in the week.
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—With assistance from Monica Raymunt and Stefan Nicola.
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