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.