A group of lenders led by Barclays is preparing a €2.4bn financing package to support Lone Star Funds' acquisition of ContiTech, the industrial products manufacturer being carved out from Germany's Continental AG, according to people familiar with the matter.

The financing is expected to include a €1.9bn term loan and a €500m high-yield bond, according to Bloomberg. The term loan will be sold to investors in the leveraged loan market in both US dollars and euros, and the transaction could launch as soon as this month.

Lone Star agreed earlier this year to acquire ContiTech for an enterprise value of €4bn, with a performance-based earnout of up to €250m on top. ContiTech is one of the world's leading providers of engineered rubber, thermoplastic and fabric technology solutions, serving customers across 34 countries with approximately 22,000 employees spanning Europe, the Americas and Asia-Pacific.

The dual-currency structure of the term loan reflects the borrower's geographically diversified revenue base, while the high-yield component signals the sponsor's intent to optimise the capital structure across both the loan and bond markets. For institutional credit investors, the transaction represents one of the larger European leveraged finance opportunities expected to come to market in the third quarter.

The deal underscores the continued role of traditional banks in arranging large-cap European acquisition financing, even as private credit managers have captured significant market share in the middle market. At €2.4bn, the ContiTech package sits above the threshold where direct lenders typically compete, though the largest private credit platforms have shown increasing appetite for deals of this scale.

For Lone Star, a Dallas-based private equity firm that has historically focused on distressed and asset-heavy investments, the ContiTech acquisition represents a significant European industrial play. The financing package suggests confidence in the business's cash flow profile, with the blended loan and bond structure providing flexibility for the sponsor while offering investors exposure to a defensive industrial credit.

The transaction is expected to attract broad syndication interest given the size of the business and the quality of the sponsor, with the leveraged loan component likely to be distributed across European and US institutional investor bases.