Rolls-Royce to sell commercial marine business
Group to sell subsidiary to Norway’s Kongsberg for £500 million
Rolls-Royce Holdings said it would sell its loss-making commercial marine business to Kongsberg Gruppen ASA for an enterprise value of £500 million, in the latest reshaping of the engineering company by chief executive Warren East.
Since taking charge in 2015, Mr East has led a turnaround of Rolls, which suffered years of falling profits due to a weak oil and gas market and declines in some of its older aero-engine programmes. The company had said in January it was considering selling its commercial marine business. That business has been most impacted by the weaker oil price as it supplies oil and gas companies with equipment. The disposal will leave Rolls focused on providing engines for civil aircraft, military planes and ships, and engines for ships, yachts, trains, trucks, mining, and nuclear power stations.
“This transaction builds on the actions we have taken over the last two years to simplify our business,” East said in a statement on Friday. While Rolls’s structure is now to East’s liking, Britain’s best-known engineering company remains under pressure from airline customers due to ongoing issues with parts not lasting as long as expected on the Trent 1000 which powers the Boeing 787. The sale of the business, which has about 3,600 employees, mostly based in the Nordic region, will generate net proceeds of around 350 million to 400 million pounds, Rolls-Royce said. The firm said it would use the proceeds to strengthen its balance sheet and provide capacity to pursue opportunities that will drive greater returns. The deal is expected to close in the first quarter of 2019, subject to regulatory clearance.