Rheinmetall Parts With €2 Billion Revenue Unit for Just €350 Million – and the Market's Not Impressed

Rheinmetall sells its civilian Power Systems unit to AEQUITA for €350M (0.18x turnover), signaling a decisive pivot to pure defense; stock down 25% YTD amid operational challenges.

Rheinmetall has agreed to sell its civilian Power Systems division to Munich-based industrial holding AEQUITA for a headline price of €350 million — a sum that amounts to barely 0.18 times the unit's annual turnover. The deal, signed on 3 June 2026, marks the Düsseldorf group's most decisive step yet toward becoming a pure-play defense contractor.

The division generated roughly €2 billion in revenue in fiscal 2025 and employs around 6,250 people globally. AEQUITA is taking over all shares and all jobs. But the proceeds are modest relative to the scale of the business, reinforcing how far Rheinmetall has moved from its automotive roots. A impairment charge of €200 million is expected in connection with the sale.

CEO Armin Papperger described the transaction as a "historically significant move" for the company. The strategy is clear: Rheinmetall wants to be a focused defense group covering land, water, air and space. Not all civilian ties are being severed immediately — the KS Huayu AluTech joint venture and the Spanish plant in Abadiano stay with Rheinmetall for now, with the latter earmarked for conversion to military production. The Neuss site will be repurposed for satellite manufacturing.

The closure of the deal is subject to regulatory approvals, with completion expected in the fourth quarter of 2026. After the sale, Rheinmetall will retain roughly 34,000 employees while its Defence segment — which posted around €10 billion in sales in 2025 — takes centre stage.

Investors, however, remain unmoved. The stock currently trades at around €1,198, some 40% below its 52-week high of €1,995 hit in September 2025. Year to date, the shares are down more than 25%. Even a record €5.7 billion order from Romania for tanks and ammunition failed to provide lasting support. The 200-day moving average of approximately €1,620 sits well above the current price, a technical warning signal that has kept buyers cautious.

The market's scepticism runs deeper than a single divestiture. Rheinmetall is pushing aggressively into new defense domains. A partnership with Boeing positions the company as the system manager for the MQ-28 Ghost Bat in Germany. In the US, American Rheinmetall and KNDS have been nominated for the US Army's Mobile Tactical Cannon programme, where the RCH 155 wheeled howitzer remains in contention. Meanwhile, speculation is growing that Rheinmetall may be among the bidders for Iveco's defence arm, alongside Leonardo and KNDS, as the sector moves toward consolidation.

Yet operational bottlenecks persist. A internal report from 4 June 2026 indicated that only about 50% of Panzerhaubitze 2000 systems, as well as Marder and Boxer armoured vehicles, were fully operational last month, citing spare-parts shortages and planning shortfalls at the defence ministry. For Rheinmetall, that shortfall could become a recurring revenue driver: maintenance, spare parts and modernisation contracts offer steady income streams that complement new-build orders.

The next milestone for the stock is the scheduled closing of the Power Systems sale in the fourth quarter. By then, the market will be looking for evidence that Rheinmetall can convert its bulging defence pipeline into tangible revenue, delivery capability and aftermarket earnings — not just strategic announcements. The €350 million divestiture is a clean break, but the proof of the pivot lies in the quarters that follow.