6th Jul 2018 08:00
LONDON (Alliance News) - Rolls-Royce Holdings PLC on Friday said it has agreed to sell its Commercial Marine business to tech systems supplier Kongsberg Gruppen following a strategic review.
The engines manufacturer said the division has an enterprise value of GBP500 million, but taking into consideration pension liabilities & provisions, separation costs, advisor fees, and working capital, it expects to receive net proceeds between GBP350 million and GBP400 million.
Following further central cost recharges, Rolls-Royce anticipates the disposal to have a GBP50 million positive profit impact. The transaction is estimated to complete in the first quarter of 2019.
The proceeds will be used to improve the "resilience" of the company's balance sheet and provide additional capital to pursue other opportunities, Rolls-Royce said.
The sale includes propulsion, deck machinery, automation & control, and a service network spanning more than 30 countries, it added.
In 2017 the Commercial Marine business generated revenue of GBP817 million and an operating loss of GBP70 million.
Meanwhile, Kongsberg will, through a trading arrangement, continue to have access to products from Bergen Engines, which remains part of Rolls-Royce Power Systems. It will also be an important partner to Rolls-Royce's Defence business for the supply of Commercial Marine products used on naval vessels.
"This transaction builds on the actions we have taken over the last two years to simplify our business," said Chief Executive Warren East.
"The sale of our Commercial Marine business will enable us to focus on our three core businesses and on meeting the vital power needs of our customers," added East.
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