Volkswagen’s Everllence sell-off advances to the next stage

Volkswagen has allowed a field of major private equity bidders, including Blackstone and Bain Capital, to progress into the second round of its sale process for Everllence, the automaker’s heavy-diesel engine and heat pump division. Preliminary bids have valued the unit at around €8bn (US$9.4bn) including debt, people familiar with the matter have told Reuters.

Among the firms to make the second round, besides Blackstone and Bain, are Brookfield Asset Management, CVC Capital Partners, Advent International and EQT. Japanese engine manufacturer Yanmar has also submitted an offer. Volkswagen is planning to sell a majority stake in Everllence while retaining a significant minority holding; binding offers are expected within approximately six weeks.

Formerly known as MAN Energy Solutions, Everllence recorded €337m in earnings before interest and taxes on revenues of €4.3bn in 2024. Its engines and power-plant turbines are viewed by prospective buyers as industrial assets with limited exposure to the kind of technology disruption currently affecting traditional automotive valuations, making it an attractive destination for private capital.

The gap between the €5-6bn valuation range reported back in January and the current €8bn preliminary bids suggests competitive tension in the process has substantially inflated the unit’s price. Whether that premium reflects a genuine strategic conviction from any party, or simply private equity firms bidding aggressively to stay in the room, is not clear.

The sale forms part of a broader push by Volkswagen to simplify its portfolio and bolster profitability as it absorbs the costs of its electric vehicle transition—which has faced multiple delays—while facing off rising competition from Chinese insurgents in Europe. The group reported net automotive cash flow of €6bn for 2025, modestly surpassing its internal expectations. Porsche SE, the holding company of the Volkswagen Group, is also reported to be considering a stake in Everllence.

The Everllence sell-off is running in parallel with Continental’s auction of its ContiTech belts and hoses division, with the German tyre and automotive group seeking to focus solely on tyres. One investment banker described it to the Financial Times as “a very rare situation where you have very similar assets in the same country at the same time”, with nearly €60bn of European private equity carve-outs recorded in 2025. 

The trend reflects a broad push by major European industrial groups to shed non-core operations as they contend with volatile energy costs on the continent, Chinese competition, and regulatory compliance costs. However, global automakers outwith Europe are not following the same playbook. Toyota is arguably moving in the opposite direction: the group is currently conducting a tender offer to take Toyota Industries fully private, shielding it from public market pressures. The take-private bid has been met with fierce opposition from activist investors led by Elliott Investment Fund, wh0 argue the automaker is significantly undervaluing the division.