Rolls-Royce signs agreement to sell its Energy Gas Turbine and Compressor business to Siemens

Tuesday, 6 May 2014

Rolls-Royce announced today that it has signed an agreement to sell its Energy gas turbine and compressor business to Siemens for a £785 million cash consideration.

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.

On completion of the transaction, Rolls-Royce will receive a further £200 million for a 25 year licensing agreement, granting Siemens access to relevant Rolls-Royce aero-derivative technology for use in the 4 to 85 megawatt power output gas turbine range.

Rolls-Royce's Energy gas turbine and compressor business has around 2,400 employees. In 2013, it was reported within the results of the Energy business where it contributed £871 million of revenue and £72 million of underlying profit. Siemens' Energy sector has around 83,500 employees and in 2013 contributed revenue of €26.6 billion and underlying profit of €1.9 billion.

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.”

The transaction excludes certain smaller Power Generation sector assets. On completion of the transaction, Rolls-Royce's shareholding in the Rolls Wood Group (RWG) joint venture, that 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, subject to closing conditions, including regulatory approvals.

A conference call was held at 10:00am UK time on Wednesday 7 May. A replay of this call is available for a period of 30 days via the following dial in:

  • Tel: +44 (0)20 7075 6589
  • UK Toll-Free: 0800 376 5689
  • Reference: 343630#

Transaction scope and exclusions

  1. The value of gross assets to be divested by Rolls-Royce in this transaction was £905 million at 31 December 2013. The transaction provides Rolls-Royce with additional cash to invest in growth.
  2. Rolls-Royce’s Energy gas turbine and compressor business supplies aero-derivative gas turbines, compressor systems and related services to customers in the Oil & Gas and Power Generation sectors.
  3. Over 4,800 Rolls-Royce aero-derivative gas turbine units have been sold to date, addressing the 3 to 66 MW power output range and recording over 180 million operating hours. Key technologies include the 27 to 44MW power output range RB211 aero-derivative gas turbine, predominantly deployed in oil and gas offshore power generation and onshore pipeline applications; the 52 to 66MW power output range Trent 60 gas turbine which is the most powerful aero-derivative in its class and is predominantly deployed in onshore power generation; and the 3.9 to 6.4MW 501-K and up to 17MW Avon 200 gas turbine engines used for onshore power generation.
  4. Over 1,700 Rolls-Royce compressors have been installed around the world, capable of up to 37MW of power output, sized to meet a wide range of flow and pressure requirements and supporting the transportation of natural gas in harsh environments and remote locations.
  5. The transaction scope excludes certain assets within the Rolls-Royce Energy business Power Generation sector, namely:
    i. Rolls-Royce Power Development, a UK entity comprising 7x Trent 60 industrial gas turbines;
    ii. Trigno Energy srl, providing power and services to a Pilkington production facility in Italy; and,
    iii. Fuel Cell Systems, supporting the Rolls-Royce joint venture with LG.

About Rolls-Royce Holdings plc

  1. Rolls-Royce’s vision is to create better power for a changing world via two main business segments, Aerospace and Marine & Industrial Power Systems (MIPS). These business segments address markets with two strong technology platforms, gas turbines and reciprocating engines, for use on land, at sea and in the air.
  2. Aerospace comprises Civil Aerospace and Defence Aerospace. MIPS comprises Marine, Energy & Nuclear and Power Systems (RRPS). On 7 March 2014, Daimler announced their intention to exercise their option to sell their 50% share in RRPS to Rolls-Royce Holdings plc. On 16 April 2014, Rolls-Royce and Daimler announced that they have agreed the valuation of Daimler’s 50% equity interest. The transaction is expected to complete within the coming months and is subject to the usual regulatory approvals.
  3. Rolls-Royce has customers in more than 120 countries, comprising more than 380 airlines and leasing customers, 160 armed forces, 4,000 marine customers, including 70 navies, and 1,600 energy and nuclear customers.
  4. Our business is focused on the 4Cs:
    • Customer – placing the customer at the heart of our business
    • Concentration – deciding where to grow and where not to
    • Cost – continually looking to increase efficiency
    • Cash – improving financial performance.
  5. Annual underlying revenue was £15.5 billion in 2013, around half of which came from the provision of aftermarket services. The firm and announced order book stood at £71.6 billion at 31 December 2013.
  6. In 2013, Rolls-Royce invested £1.1 billion on research and development. We also support a global network of 31 University Technology Centres, which position Rolls-Royce engineers with the forefront of scientific research.
  7. Rolls-Royce employs over 55,000 people in 45 countries. Over 17,000 of these are engineers.
  8. The Group has a strong commitment to apprentice and graduate recruitment and to further developing employee skills. In 2013 we employed 379 graduates and 288 apprentices through our worldwide training programmes.

For further information, please contact:

Investors:
Simon Goodson
Director, Investor Relations
Rolls-Royce plc
Tel:  +44 (0)20 7227 9237
Email: simon.goodson@rolls-royce.com

Media:
Richard Wray
Director of External Communications
Rolls-Royce plc
Tel: +44 (0)20 7227 9163
Mobile +44 (0)7974 918 416
Email: richard.wray@rolls-royce.com

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