27th Sep 2021 12:42
(Alliance News) - Rolls-Royce Holdings PLC has sold its ITP Aero subsidiary to a consortium led by Bain Capital for EUR1.7 billion, the engineering group announced on Monday.
The agreement is a "key element" of Rolls-Royce's disposal programme to help rebuild its balance sheet, the company noted. Last year, Rolls-Royce had said it would seek to raise GBP2 billion by selling assets after the coronavirus crisis ravaged the company's balance sheet.
ITP Aero was founded in 1989 and was created on the basis of a European defence programme, Eurofighter. Since then it has since consolidated itself as the Spanish aeronautical engine company, headquartered in Zamudio, Bizkaia in the Basque Country, Spain.
The consortium led by Bain Capital, the private equity firm, includes JB Capital and Sapa.
"Today's announcement is a significant milestone for our disposal programme as we work to strengthen our balance sheet, in support of our medium-term ambition to return to an investment grade credit profile," said Chief Executive Warren East.
"This agreement represents an attractive outcome for both Rolls-Royce and ITP Aero."
Last month, the jet engine maker agreed the sale of Bergen Engines to Langley Holdings PLC for an enterprise value of EUR63 million.
Rolls-Royce shares were trading 11% higher in London on Monday at 146.78 pence each, the best large-cap performer.
Earlier on Monday, the company reported that its Rolls-Royce North America unit has been selected by the US Air Force to provide the power plant for the Boeing B-52 Stratofortress.
The agreement was signed under the Commercial Engine Replacement Program and is worth a potential USD2.6 billion.
The single award contract provides for 608 military derivative commercial engines, plus spare engines, associated support equipment and commercial engineering data, to include sustainment activities, to be used on the B-52H bomber fleet, the US Air Force said on Friday last week.
The Pentagon made the announcement after a multi-year competition, which saw Rolls-Royce beat out US rivals General Electric Co and Pratt & Whitney for the lucrative contract.
As part of the deal, Rolls-Royce will build and test the F130 engines at its Indianapolis, Indiana, facility following the recent completion of a USD600 million investment in the manufacturing campus. The B-52 CERP win creates demand for 650 engines to be produced at the site.
By Will Paige; [email protected]
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