FTSE blue-chip Rolls-Royce has agreed to sell Bergen Engines, its Norwegian maritime engine manufacturing arm, to UK engineering group Langley Holdings with a new price tag of €63m (£53.6m).
Rolls-Royce will retain €110m (£93.6m) from the sale – €70m from the transaction in addition to €40m Bergen currently holds in cash.
This is in line with the jet engine maker’s target to generate £2bn in assets from disposals to recover from the financial blow of the pandemic which grounded the planes of its airline clients.
It is part of the “ongoing portfolio management to create a simpler, more focused group,” according to boss Warren East.
A deal to sell its Spanish unit ITP Aero is also on the cards. It could reach €1.5bn (almost £1.3bn) and bring in the bulk of the cash.
Rolls-Royce had put Bergen back on sale in March after a deal to sell the company to a Russian group for €150m (£132.5m) was vetoed by Norwegian politicians on national security grounds.
Langley’s acquisition includes the Bergen factory and workshop in Norway as well as its subsidiaries. The manufacturer builds medium speed liquid and gas-fuelled engines for the commercial marine sector, naval vessels and land-based power generation applications. Bergen is expected to generate €260m (£221m) in 2021.
Langley’s boss Anthony Langley called the acquisition a “strategic step in the development of our power solutions division,” which already includes Italian Marelli Motori and German Piller Power Systems.
The Nottinghamshire-based industrial conglomerate already employs 4,600 people and has units in Germany, France and Italy. It has said it will operate Bergen, which employs 900 people worldwide, as a stand-alone business.
Subject to certain conditions, the deal is scheduled to be complete for 31 December and funded by Langley’s cash reserves.