Smart marine consolidation continues apace as Kongsberg Group plans to buy Rolls-Royce’s commercial marine business in a deal valuing the division at £500 million.
The acquisition, which follows Rolls-Royce placing the marine business under ‘strategic review’ in January, is expected to be completed in the first quarter of 2019, subject to clearance from regulatory authorities.
The sale includes Rolls-Royce’s burgeoning ship intelligence activities alongside its portfolio of propulsion, deck machinery and automation and control systems, as well as its global service network and ship design capability.
Geir Håøy, chief executive and president, Kongsberg, said: “The acquisition makes us a more complete supplier to the maritime industry. The maritime industry is becoming increasingly globalised and is undergoing considerable technological and market driven changes. With this acquisition we will strengthen our strategic position with shipowners, shipyards and other customers and partners.”
Mikael Makinen, president, commercial marine, Rolls-Royce, added: “This deal 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. Rolls-Royce has been responsible for leading many of those technological advancements, and I am sure that this business will prosper in the years to come.”
Although Rolls-Royce’s engine portfolio is not included in the sale – remaining with the parent company to enable it to continue serving naval clients – the acquisition is accompanied by a ‘trading agreement’ that will enable Kongsberg to have access to Bergen Engines’ diesel- and pure-gas burning medium-speed engines. In a statement, the companies noted that ‘the Bergen engine range is a key component that will enable Kongsberg to be a leader in the continued development of integrated ship systems’.
The deal brings together two companies heavily invested in marine digitalisation, ship intelligence and autonomous operations. Kongsberg launched its big data platform Kognifai last year and is playing a lead role in the development of ‘Yara Birkeland’, which aims to be the world’s first autonomous commercial cargo vessel; Recent successes for Rolls-Royce include selling the first auto-crossing systems and launching an autonomous and remote-control operations demonstrator with Finferries.
The move follows the recent combination of two other ‘smart marine’ superpowers, Wärtsilä and Transas. The acquisition by Wärtsilä, valued at €210 million, was completed in May.
Kongsberg has around 7,000 employees and generated turnover of NOK14.5 billion (€1.54 billion) last year. Rolls-Royce’s commercial marine business has around 3,600 employees and achieved turnover of £817 million (€923.5 million) in 2017.
After pension liabilities and provisions, separation costs, advisor fees and working capital, Rolls-Royce expects net proceeds from the deal of £350-450 million.