Rolls-Royce sells energy turbine, compressor business to Siemens

Last week, we had indicated that the turbomachinery industry will likely major shifts with GE and Siemens planning to take over Alstom and Siemens eyeing Rolls-Royce's energy turbine and compressor business. Now Rolls-Royce has announced that it has signed an agreement to sell its energy gas turbine and compressor business to Siemens for £785 million cash ($1.33 billion).

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. Among the machines that Siemens would now own includes the RB211s and Trent.

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.

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.