Wednesday, 30 July 2014
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Siemens to acquire Rolls-Royce energy turbine business

 Rolls-Royce is to sell its energy gas turbine and compressor business to Siemens for £785m, a deal that allows Siemens to close a technology gap in its gas turbine portfolio..

The business being sold supplies aero-derivative gas turbines, compressor systems and related services to customers in the oil and gas and power generation sectors. The transaction excludes certain smaller power generation sector assets.

On completion of the transaction, Rolls-Royce will receive a further £200m for a 25 year licensing agreement, which gives Siemens access to Rolls-Royce aero-derivative technology for use in the four to 85MW power output gas turbine.

Rolls-Royce’s energy gas turbine and compressor business has around 2,400 employees and in 2013 contributed £871m of revenue and £72m of underlying profit. By contrast, Siemens’ energy sector has around 83,500 employees and in 2013 contributed revenue of €26.6bn and underlying profit of €1.9bn.

In a statement, John Rishton, Rolls-Royce, CEO, said: ‘This agreement will give the energy business greater opportunities as part of a much larger energy company and allows Rolls-Royce to concentrate on the areas of business where we can add most value.’

On completion of the transaction, Rolls-Royce’s shareholding in the Rolls Wood Group (RWG) joint venture - which provides maintenance, repair and overhaul services - will be transferred to Siemens.

The transaction has been approved by the boards of directors of Rolls-Royce and Siemens, and is expected to complete before the end of December 2014.


Readers' comments (5)

  • I have not been consulted as a Rolls Royce shareholder. I do not want any more business going to Gewrmany at any price. Germany is too busy propping up Russian rearmamaent.

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  • It would be nice to see some more journalistic detail such as where the 2,400 RR employees affected are based and how it will affect other Siemens sites in UK such as at Lincoln. Is this going to lead to rationalisation or moving of capabilities?

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  • What's the point of having nations anymore?

    As more and more of our technological and economic capability is sold off we steadily exchange democratic control via the organ of state to market forces.

    Inevitably this means that we human beings lose a little bit of our corporate sovereignty for moderate increases in economic activity.

    Its not difficult to imagine a world where nation states are little more than welfare providers and the real power is held by a clique of global corporations.

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  • Just in time for the shale gas driven boom in gas turbine power plant as old nuclear and coal retires! Why sell it off anyway, retreat into 'core business' is not a great way to grow a company. Will the small nuclear plant expertise go next?

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  • As usual, there are quite a few ignorant comments posted on The Engineer's website.

    To "scale up" its technology and expertise into certain other markets RR needs volume orders where business projections are sizeable. Hence the sale of this business.

    RR also needs cash, lots of it, having recently purchased Tognum for circa £4b.

    Accruing further market share in Marine is also top of the agenda. Hence the proposed acquisition of Wartsila for £7b.

    Marine is likely to be a much better business for RR than energy, where it was a small player. Much better, for the moment, to concentrate on businesses where they'll be top 1/2 in the world: like big civil and defence aerospace.

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