From now on, Wartsila’s 2-stroke engine business will be listed as “discontinued operations” following an announcement today that it has sold a 70 percent stake in that business unit to China State Shipbuilding Corporation (CSSC) via a new joint venture.
The transaction is valued at approximately EUR 46 million which now makes CSSC the number 2 two stroke engine builder in the world behind MAN Diesel and Turbo.
Wartsila notes they will cooperate with CSSC with regard to engine technology, sales & marketing and service activities. The responsibility for servicing these 2-strokes will remain with Wartsila services however through the company’s global network.
No significant changes however are in store for the Switzerland-based business unit. The company notes the head office will remain at the present 2-stroke engine headquarters in Winterthur and the management team will remain in place.
In parallel with this announcement, Wartsila and CSSC signed an agreement to establish a separate joint venture company for the manufacturing of medium and large bore medium-speed diesel and dual-fuel engines. Called CSSC Wärtsilä Engine (Shanghai) Co. Ltd, the new factory will be located in Lingang, Shanghai and is expected to have its first engine ready for delivery by the end of 2015. Wartsila will have a 49 percent stake in exchange for an equity investment of EUR 27 million.
“We have enjoyed good co-operation with CSSC for many years, and we are convinced that by joining forces we can better serve the needs of our global customers. CSSC shares our vision for the future of the 2-stroke marine engine market, and we feel that this agreement will benefit both parties as well as the entire shipping sector. By enhancing the sales volume of Wärtsilä’s 2-stroke engines, product development can be accelerated and critical new engine solutions can be brought to the market much faster than earlier,” says Jaakko Eskola, Senior Executive Vice President, Ship Power, Wärtsilä Corporation.
“We are very pleased that this agreement has been made and we look forward to working closely with Wärtsilä in this joint venture project. Wärtsilä is a company that we admire as a technology leader, and as a supplier that has provided economic and environmental benefits to ship owners and operators through its high quality products,” says Wu Qiang, Vice President, CSSC.
The closing of the transaction is expected in the first quarter of 2015 following regulatory approvals.