Rolls-Royce confirms sale of Energy gas turbine business in near £1bn deal
ROLLS-ROYCE has confirmed the sale of its Energy gas turbine and compressor business to German group Siemens in a deal worth £785m.
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.
On completion of the transaction, Rolls-Royce will receive a further £200m 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. In 2013, it was reported within the results of the Energy business where it contributed £871m of revenue and £72m of underlying profit.
Siemens’ Energy sector has around 83,500 employees and in 2013 contributed revenue of €26.6bn and underlying profit of €1.9bn.
John Rishton, Rolls-Royce, CEO, said: “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.”
The transaction excludes certain smaller power generation sector assets. On completion of the transaction, Rolls-Royce’s shareholding in the Rolls Wood Group (RWG) joint venture, that provides maintenance, repair and overhaul services, will be transferred to Siemens.
The transaction has been approved by the boards of directors of Rolls-Royce and Siemens, and is expected to complete before the end of December 2014, subject to closing conditions, including regulatory approvals.
Siemens had been keen to expand its presence in the oil and gas and power generation sectors.
Reports in the French press last month had suggested that the German group was prepared to offer French-owned rival Alstom half of its train-making business and some cash in return for its business making turbines for the energy industry.
However, Alstom eventually went for a rival bid from US-based General Electric.
