Rolls-Royce plc has an agreement to sell L’Orange, a supplier of fuel-injection technology and a wholly owned subsidiary of Rolls-Royce Power Systems, to Woodward Inc., a Colorado-based engine designer and manufacturer. The sale had been anticipated as part of Rolls’ wider revamping of its organization, and brings an estimated £610 million ($859 million) back to the U.K. jet-engine and industrial power systems group.
Rolls noted the proceeds of the sale will be used to improve its balance sheet, and that it will have no effect on the rest of its Rolls-Royce Power Systems business.
“This transaction builds on the actions we have taken over the last two years to simplify our business,” stated Rolls-Royce CEO Warren East. “The divestiture of L’Orange enables Rolls-Royce Power Systems to focus on other long-term, high-growth opportunities and our company to allocate our capital to core technologies and businesses that drive greater returns for the group.”
L’Orange, based in Stuttgart, offers a range of fuel-injection technology for off-highway, marine power and propulsion systems, special-application vehicles, oil-and-gas processing, and power generation. Its systems are adaptable for use with various fuels and additives. It supplies its technologies to several diesel engine manufacturers, including Rolls-Royce Power Systems’ MTU Friedrichshafen and Bergen Engines subsidiaries.
Rolls noted that it secured a long-term supply agreement with Woodward for L’Orange technologies, with an initial term of 15 years.
The L’Orange business has approximately 1,000 employees in Germany, the U.S. and China.
Woodward develops control system technologies and components for aerospace and industrial engines. It will rename the new holding Woodward L’Orange, and incorporate it into its own Industrial segment.
The transaction was approved by the directors of both Rolls-Royce and Woodward, as well as the Rolls-Royce Power Systems supervisory board. The transaction is expected to close by the end of the second quarter of calendar 2018, subject to clearance from the German antitrust authorities.
