Rolls-Royce Holdings to Sell Commercial Marine Business to Kongsberg -- Update

(Adds details on rights issue and Kongsberg fundraising.)

 
   By Oliver Griffin and Dominic Chopping

Rolls-Royce Holdings PLC (RR.LN) said Friday that it has sold its commercial marine business to Kongsberg Automotive ASA (KOA.OS) for a total of 500 million pounds ($661.4 million), as part of the British aircraft-engine maker's plan to simplify its business.

Rolls-Royce said the sale followed a strategic review of its commercial marine operations that was announced in January.

Net proceeds from the transaction are expected to be between GBP350 million and GBP400 million, depending on the amount of working capital in the division at completion, the company said.

Rolls-Royce said the proceeds will be used to improve the resilience of its balance sheet and provide additional capital for pursuing opportunities to drive returns for the group.

"The sale of our commercial marine business will enable us to focus on our three core businesses and on meeting the vital power needs of our customers," Chief Executive Warren East.

Kongsberg, a Norwegian technology group, said it will finance the deal with a 5 billion-Norwegian kroner ($619 million) rights issue and issue a new bond loan. Norway's government, which owns 50% of the company, said it feels positive about participating in the rights issue, subject to parliamentary consent.

The rights issue is expected to take place in the fourth quarter of 2018, while the acquisition is set to be completed in the first quarter of 2019.

"The acquisition of Rolls-Royce Commercial Marine makes us a more complete supplier to the maritime industry," said Kongsberg Chief Executive Geir Haoy.

Rolls-Royce Commercial Marine has approximately 3,600 employees and posted an annual turnover of NOK8.9 billion in 2017. Kongsberg has approximately 7,000 employees and recorded turnover of NOK14.5 billion in 2017.

Write to Oliver Griffin at oliver.griffin@dowjones.com and Dominic Chopping at dominic.chopping@wsj.com; @domchopping, @WSJNordics

(END) Dow Jones Newswires

July 06, 2018 02:24 ET (06:24 GMT)

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