The group has seen fast-growing demand for its armaments, from ammunition to air defence systems and military vehicles, as Europe races to rearm faced with a hostile Russia and worries about US security guarantees.

It also has a smaller unit supplying carmakers but this has fared less well as the German auto industry struggles, and the group had been planning to offload the division for some time.

Rheinmetall said it had signed an agreement with the Munich-based investment firm Aequita, which will buy the division for a provisional price of 350 million euros, with the deal due to close in the fourth quarter of 2026.

Aequita intends to retain all the roughly 6,250 employees of the division, which makes a wide range of components used in cars, from electronics to specialised valves.

"This is a significant milestone in the company's history," said Rheinmetall CEO Armin Papperger.

"We are focusing on the high-margin business with military customers, where we have excellent growth opportunities."

The news came a day after Rheinmetall signed a 5.7-billion-euro deal to supply the Romanian armed forces, its biggest international contract for some time.

Aequita focuses on acquiring and turning around companies, and its portfolio includes firms in sectors ranging from autos to chemicals.

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RHEINMETALL