Continental to Spin Off Powertrain Unit, Drops Plan for IPO (3)

German car-parts maker Continental AG will spin off its powertrain division to shareholders, dropping a plan to sell stock in an initial public offering that had already been delayed against a darkening industry outlook.

Investors cheered the decision, sending Continental up as much as 3.8% despite a 2.5 billion-euro ($2.8 billion) writedown at the business, called Vitesco Technologies, and other operations. Post-spinoff, the world’s second-largest auto-parts supplier will focus more closely on electronic components and tires as the industry shifts toward battery power.

“It signals to the market Conti’s willingness and ability to unlock shareholder value,” Tom Narayan, an ...