Rolls-Royce to sell energy gas turbine and compressor business to Siemens for $1.33 bn
07 May 2014
Britain's Rolls-Royce Plc, a leading global provider of airplane engines, power systems and services, yesterday struck a deal to sell its energy gas turbine and compressor business to German engineering giant Siemens AG for £785 million ($1.33 billion).
The business being sold supplies aero-derivative gas turbines, compressor systems and related services to customers in the oil and gas and power generation sectors. The value of gross assets to be sold was £905 million at 31 December 2013.
The sale does not include certain smaller power generation sector assets, including Rolls-Royce Power Development, a UK entity comprising 7x Trent 60 industrial gas turbines, Trigno Energy srl, providing power and services to a Pilkington production facility in Italy, and, Fuel Cell Systems, a joint venture with South Korea's LG.
As part of the deal, Rolls-Royce's shareholding in the Rolls Wood Group joint venture, that provides maintenance, repair and overhaul services, will be transferred to Siemens.
Post closing, Rolls-Royce will receive a further £200 million ($337 million) for a 25-year licensing agreement, granting Siemens access to relevant Rolls-Royce aero-derivative technology for use in the 4 to 85 megawatt power output gas turbine range.
Rolls-Royce's Energy gas turbine and compressor business has around 2,400 employees and accounted for £871 million in revenue and £72 million in underlying profit in 2013 within the Energy business.
Siemens' Energy sector has around 83,500 employees and in 2013 contributed revenue of €26.6 billion and underlying profit of €1.9 billion.
''This agreement will give the Energy business greater opportunities as part of a much larger energy company and allows Rolls-Royce to concentrate on the areas of business where we can add most value,'' said, John Rishton, CEO of London-based Rolls-Royce.
Rolls-Royce, which also makes engines for aircrafts, is also in the midst of taking full control of its equal joint venture with Daimler, Rolls-Royce Power Systems, for $3.36 billion, while Munich-based Siemens is planning to table a competing bid for French power generation and rail transportation giant Alsom SA. (See: Siemens to table offer for Alstom if given four weeks to conduct due diligence)