Rolls-Royce offloads German business in £610m deal

Rolls-Royce is set to sell L’Orange, a wholly owned subsidiary of Rolls-Royce Power Systems, to Woodward, in a deal worth £610m.

Colorado-based Woodward is a designer, manufacturer and service provider of control system solutions and components for the aerospace and industrial markets. L’Orange will be renamed Woodward L’Orange and will be integrated into Woodward’s industrial business.

L’Orange supplies fuel injection technology for engines that power a wide range of industrial applications including marine power and propulsion systems, special-application vehicles, oil and gas processing, and power generation. Rolls-Royce says that L’Orange will remain “an important partner and supplier” for Rolls-Royce Power Systems in the future through a long-term supply agreement, with an initial term of 15 years.

L’Orange is based in Stuttgart, and has approximately 1,000 employees based mostly in Germany, but also in the US and China. In 2017, the firm reproted revenues of €244m, underlying operating profit of €64m and post-tax free cash flow of €51m.

Rolls-Royce CEO Warren East said: “This transaction builds on the actions we have taken over the last two years to simplify our business. The divestiture of L’Orange enables Rolls-Royce Power Systems to focus on other long-term, high growth opportunities and our company to allocate our capital to core technologies and businesses that drive greater returns for the Group.”

Andreas Schell, president and CEO Rolls-Royce Power Systems, added: “Rolls-Royce Power Systems will remain a key customer of Woodward L’Orange. We have enjoyed working with L’Orange who have a leading position in their markets, excellent technology, a skilled workforce and strong leadership. We wish them well as they join the Woodward organisation.”