Rolls-Royce has signed a 1.7 billion euros – or £1.5 billion – deal to sell its Spanish ITP Aero engines business.
The FTSE 100 engineering giant, which has its civil aerospace and defence divisions in Derby, has agreed to sell to a consortium led by private equity giant Bain.
The deal, expected to be completed in the first half of 2022, will be used to strengthen the firm’s balance sheet following months of sweeping cuts.
Shares in Rolls-Royce leapt by more than 10 per cent immediately after the announcement.
Rolls-Royce recently came back from eye-watering £5.4 billion losses to post bottom-line profits of £393 million for the first six months of the year – but warned that sales to the pandemic-hit global aviation industry would not recover until after 2022.
At the end of last year the business revealed details of plans to cut manufacturing capacity following the big drop in orders – affecting its workers in the East and West Midlands, Lancashire and Scotland.
The group said it needed to make savings of £1.3 billion a year by the end of 2022, predominantly in its civil aerospace business.
ITP Aero reported revenues of 735 million euros last year – about £627 million – and it employs 4,300 people at production centres in Spain, UK, Mexico, Malta and India.
Earlier this year, Rolls-Royce’s former site at Hucknall, in Nottinghamshire, was integrated into the ITP Aero business.
ITP is a partner in Rolls-Royce’s next generation UltraFan engine and makes parts for Pratt & Whitney, General Electric and Honeywell.
It is also part of the consortium making engines for the Eurofighter Typhoon, the Airbus A400M Atlas military transport aircraft and the Tiger helicopter.
The consortium acquiring ITP Aero – which is headquartered in the Basque region and makes aircraft engines and turbines – includes global heavy vehicle tech business Sapa and financial services business JB Capital.
Warren East, chief executive of Rolls-Royce, called the sale a “significant milestone” in its plan to boost its credit position.
Mr East said: “This agreement represents an attractive outcome for both Rolls-Royce and ITP Aero and we are also grateful to the Spanish and Basque governments for the constructive discussions we have held with them during the process.
“The creation of an independent ITP Aero is a great opportunity for the company, its people and other stakeholders.
“A financially, technologically, and industrially strong ITP Aero is also vital to Rolls-Royce.”
Carlos Alzola, chief executive of ITP Aero, said: “This transaction is a significant moment for all of us at ITP Aero.
“We will be able to further strengthen our position in the aerospace industry, continue to provide high levels of innovation and service to our customers and expand our business to capture significant growth opportunities.
“All of us at ITP Aero are eager to start the next chapter of our story as an independent company with a strong strategic plan and financial support behind us, building on our 30 years of success, to create a global leader in aerospace that is headquartered in the Basque Country in Spain.”
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