Rolls-Royce is making progress on the potential sale of Spanish subsidiary Industria de Turbo Propulsores (ITP Aero), but has hit a snag with its proposed divestiture of Norway-based Bergen Engines, according to the British engine manufacturer.
Rolls-Royce is discussing ITP Aero with potential buyers. (ITP Aero)
Rolls-Royce, which announced the Bergen sale in early February, said on 11 March that it has “temporarily paused” the transaction at the request of the Norwegian government, which is considering blocking the proposed EUR150 million (USD179.7 million) deal due to national security concerns.
Bergen makes medium-speed gas and diesel engines for marine and power generation customers, with a small number of its engines used in naval applications. The buyer, TMH International, is part of Russia-based TMH Group.
The Norwegian “government is now working to map out all aspects relating to the possible sale of Bergen Engines”, said Norwegian Justice and Public Security Minister Monica Maeland. “The current security situation means that we must closely monitor foreign investments taking place in strategic sectors.”
Meanwhile, a potentially larger transaction, the sale of ITP Aero, is now the topic of talks with “a number of interested buyers”, said Stephen Daintith, Rolls-Royce’s chief financial officer. Rolls-Royce is proposing to transfer its Hucknall, England, facility and some of its Barnoldswick, England, work to ITP to make the aircraft engine business more attractive to a potential acquirer.
Rolls-Royce announced in August that it was exploring selling ITP as part of an effort to divest non-core assets and raise at least GBP2 billion to shore up its beleaguered finances. Revenue at Rolls-Royce fell 23.9% to GBP11.8 billion in 2020, as the coronavirus-fuelled slump in commercial aviation overshadowed a strong defence performance.
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