Rolls-Royce sells energy arm to Siemens in £1bn deal

Aero-engineer Rolls-Royce sells non-core energy unit to German engineering giant

Rolls-Royce worker with the company's MT30 engine
The energy business has around 2,400 employees, and reported revenues of £900m last year

Rolls-Royce has agreed to sell in its gas turbine and compressor energy business to Siemens in a £1bn deal.

The British engineering company, which last week said it was talks the German company over the business, will receive £785m cash and a further £200m for a 25-year licensing agreement that will give Siemens access to Rolls-Royce gas turbine technology.

John Rishton, chief executive of Rolls-Royce, 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.”

Rolls-Royce's energy arm employs around 2,400 employees with revenue of £871m and underlying profits of £72m. This compares to Siemens' energy business which has 83,500 staff, revenues of €26.6bn (£22bn) and underlying profit of €1.9bn.

The British company's gas turbines were originally developed for use in the aviation industry, but Siemens said they were "an attractive power supply option in the oil and gas industry", especially on offshore oil platforms where space is limited.

Wednesday's deal excludes certain smaller power generation sector assets, Rolls-Royce said. 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 is expected to complete before the end of December.

Rolls-Royce shares dipped 0.3pc in early trading.