Norwegian technology group Kongsberg has entered into an agreement to acquire Rolls-Royce’s struggling commercial marine business in a GBP 500 million deal.
The acquisition includes the marine products, systems and aftermarket services businesses of subsidiaries of Rolls-Royce Plc.
“The sale includes propulsion, deck machinery, automation and control, a service network spanning more than 30 countries and ship design capability, which to date has seen around 1,000 ships of Rolls-Royce design delivered to offshore, cargo, passenger and fishing vessel customers worldwide,” Rolls-Royce Plc said in a statement. Rolls-Royce’s Ship Intelligence activities are also included in the deal.
The transaction does not include Bergen Engines or Rolls-Royce’s Naval Business.
Rolls-Royce Commercial Marine has approximately 3,600 employees and is represented in 34 countries across the globe.
Combined, the two companies have equipment and deliveries associated with around 30,000 vessels worldwide.
“The acquisition strengthens our global presence and will give increased sales and service volumes. KONGSBERG is a world leader within automation, navigation and control systems, whilst Rolls-Royce Commercial Marine is complementary with its deliveries of propellers, propulsion systems, handling systems and ship design. Both companies hold leading positions within digitalization, ship intelligence and concepts for autonomy. By bringing together this we are positioning us as a significant strategic supplier of complete solutions for the future maritime industry”, says Geir Håøy, CEO and President of Kongsberg.
Rolls-Royce Commercial Marine has been hit hard in recent years as a result of “challenging marketing conditions” within offshore oil and gas and the greater maritime industry as a whole.
In January, Rolls-Royce initiated a strategic review of its marine unit and its potential sale amid a group-wide plan to consolidate its operating businesses into three core units.
In April, Finnish technology group Warstila said it was considering Rolls-Royce’s marine unit as an acquisition target.
Kongsberg says a main priority going forward is ensuring profitability, and at the same time being an industry innovation leader.
“The acquisition will also strengthen Norwegian ownership in the world leading Norwegian maritime cluster, whilst the company will have a stronger Nordic and international position,” the company stated.
Seperately, both Kongsberg and Rolls-Royce have been on the front lines in the advancement of technology within the maritime industry, especially in the area of ship intelligence and autonomous shipping technology.
“This deal is good news for Rolls-Royce and KONGSBERG and comes at a time when the maritime industry is at the dawn of a new and exciting era where digital and electrical technologies will transform shipping,” says Mikael Makinen, Rolls-Royce President, Commercial Marine. “Rolls-Royce has been responsible for leading many of those technological advancements, and with combination of great people, market leading technology and a desire by KONGSBERG to take this business to the next level, I’m sure that this business will prosper in the years to come.”
Rolls-Royce Commercial Marine had turnover of NOK 8.9 billion in 2017.
Kongsberg employs 7,000 people in 25 countries and in 2017 had a turnover of NOK 14.5 billion.
Kongsberg will finance the acquisition through a combination of new equity and a new bond loan.
The acquisition is still subject to regulatory clearance in “several jurisdictions”.
Kongsberg says the deal is expected to close in the first quarter of 2019 subject to regulatory approval.