Rolls-Royce has entered exclusive talks to sell its Spanish unit ITP Aero to a consortium led investment house Bain Capital for a rumoured €1.6bn (£1.5bn).
The FTSE 100 engineer is looking to raise £2bn from selling off various assets in a bid to restore its balance sheet after the travails of the coronavirus pandemic.
ITP, which makes engines and turbines, is at the core of the disposal programme, as it is the most valuable asset up for sale.
A deal worth €1.6bn would beat previous estimates that valued ITP at €1.5bn.
Following media reports of a potential sale, Rolls-Royce this evening confirmed it had entered into talks with Bain over a deal.
“Rolls-Royce confirms it has decided to enter into exclusive discussions with a consortium led by Bain Capital on a potential sale of the business”, it said.
“There can be no certainty that an agreement will be reached. Rolls-Royce will make a further statement as appropriate.”
It is the second potential deal the blue chip has agreed today, after confirming plans to sell its Norwegian engines unit Bergen to fellow British engineers Langley for €63m.
It had previously agreed to sell the firm to a Russian firm, but Norwegian politicians vetoed the deal on national security grounds.
Spanish newspaper Expansion said both the Spanish government and authorities in the Basque region in the north-east, where ITP Aero is based, were in favour of a sale to Bain, saying engineering group Sener was also part of the consortium.
Sky News had previously reported that rival Spanish aerospace group Aciturri was planning its own bid, while financial buyers KKR and TowerBrook Capital had also been reported to be in the running.
Shares in the firm were up 1.6 per cent today.