Rolls-Royce and Goodrich announce engine controls joint venture
Monday, 22 December 2008
Further to the announcement on 14 August 2008 regarding the proposed formation of an engine controls joint venture, Rolls-Royce today announced agreement with Goodrich Corporation to form Rolls-Royce Goodrich Engine Control Systems Limited, trading as Aero Engine Controls. Aero Engine Controls will develop and supply engine controls for Rolls-Royce engines. The transaction is expected to be complete within two weeks.
Aero Engine Controls, a 50:50 joint venture, will combine Goodrich's existing UK-based engine controls design and manufacturing business with Rolls-Royce's Full Authority Digital Engine Control (FADEC) engineering expertise. Goodrich will retain the aftermarket products and services business associated with the joint venture's products.
In establishing the joint venture both parties will have transferred approximately £14m of assets and cash into Aero Engine Controls. In addition Rolls-Royce will make a cash payment of $100m to Goodrich Corporation and will assume certain foreign exchange contracts with an estimated cost to Rolls-Royce of £20m. Assets being transferred from Rolls-Royce to the joint venture are expected to have minimal impact on Rolls-Royce Group profitability estimates.
Aero Engine Controls will have around 1,330 employees, comprising staff who will transfer from the two companies, and has sites in Derby, Birmingham and Belfast.
Colin Smith, Director-Engineering & Technology, Rolls-Royce plc said, "We are pleased with the progress made since August to form Aero Engine Controls. Forming this new company provides an exciting opportunity to combine the skills, knowledge and expertise of both companies into a single team with common goals.It also enables us to share our joint capability and work more efficiently to meet the demands of an increasingly important market."
- Rolls-Royce, a world-leading provider of power systems and services for use on land, at sea and in the air, operates in four global markets - civil aerospace, defence aerospace, marine and energy. Rolls-Royce has a broad customer base comprising 600 airlines, 4,000 corporate and utility aircraft and helicopter operators, 160 armed forces, more than 2,000 marine customers including 70 navies, and energy customers in 120 countries. For more information visit http://www.rolls-royce.com.
- Goodrich Corporation, a Fortune 500 company, is a global supplier of systems and services to aerospace, defence and homeland security markets. With one of the most strategically diversified portfolios of products in the industry, Goodrich serves a global customer base with significant worldwide manufacturing and service facilities. For more information visit http://www.goodrich.com.
- The engine control system ensures that the engine safely provides the correct power in response to the pilot's demand. It does this by regulating the flow of fuel to the engine and adjusts many other variable features, which optimise the engine performance and ensure safety. The system also provides data to the aircraft avionic systems and for cockpit indication. It consists of electronic, hydraulic and mechanical components and depends for its function on high integrity software.
- Goodrich's UK-based controls design and manufacturing is based in Birmingham and Belfast, UK. Rolls-Royce aero controls is based in Bristol and Derby in the UK, Dahlewitz in Germany and Indianapolis in the United States.
- Approximately 1,100 people at Goodrich (over 3 sites) and 180 people at Rolls-Royce (over 2 sites) will be transferred to Aero Engine Controls on the first day of trading. It is expected that some employees will be transferred from Rolls-Royce in Indianapolis in 2009.
- The agreement includes usual mechanisms allowing the exit by either party from the joint venture in the event of a change of control of either party, insolvency or an irresolvable dispute. Depending on the triggering event, these provisions provide one of the parties with the option to acquire the other's share of the joint venture at net asset value of the venture. In addition, under certain circumstances, Rolls-Royce could be required to acquire the associated aftermarket products and services business from Goodrich at a price to be determined at the time of the transaction by an earnings based formula subject to certain caps on the level of consideration.