Rolls-Royce agrees £2bn deal to buy Daimler out of German JV
ENGINE manufacturer Rolls-Royce will have to pay more than £2bn in order to acquire the 50% of a joint venture project it set up in collaboration with Daimler.
Rolls-Royce Power Systems is the German-based diesel engine supplier – previously known as Tognum – which was acquired by the joint venture three years ago.
Daimler agreed earlier this year to sell its half share in the project in a move that was set to cost Rolls-Royce £1.9bn – the valuation placed on the option in the Rolls-Royce balance sheet at December 31, 2013.
However, the option was the subject of a formal valuation process so the full price had yet to be determined.
In a statement, Rolls-Royce said it had now reached an agreement with Daimler to acquire the outstanding 50% of the business for €2.43bn (£2.007bn).
The group said the transaction was expected to complete within the next five months and was subject to the usual regulatory approvals.
RRPS is considered a world leader in reciprocating engines. It is headquartered in Friedrichshafen in Southern Germany and employs around 11,000 people.
John Rishton, CEO of Rolls-Royce said: “We have enjoyed an outstanding working relationship with Daimler and this agreement represents a good outcome for both of our companies. Rolls-Royce Power Systems has added scale and capability to our reciprocating engines business. It has world class technology, operates in long term growth markets and has proved a valuable addition to our Marine and Industrial Power Systems division.”
Dr. Wolfgang Bernhard, Daimler’s board member for trucks and buses, added: “We are pleased to reach an agreement with Rolls-Royce in such a short period of time. This underlines the profound partnership established during the past years. Irrespective of the ownership situation, we will keep connections to RRPS based on our existing supplier relationship.”
The deal will see Rolls-Royce take full control of the business, allowing it to improve its research and development capabilities.
Daimler is thought likely to use the windfall to invest in its core business.
