The deal to buy Rolls-Royce's commercial marine business will see Kongsberg broadening its scope of business in the maritime sphere.
“The acquisition of Rolls-Royce Commercial Marine 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,” said Geir Håøy, ceo and president of Kongsberg.
The acquisition has an enterprise value of GBP500m on a cash, debt free basis, and does not include Bergen Engines or Rolls-Royce's Naval Business.
Rolls-Royce marine represented in 35 countries with 3,600 employees, with an annual turnover of NOK8.9bn ($1.1bn), while Kongsberg is represented in more than 25 countries with 7,000 employees, and an annual turnover of NOK14.5bn. The two companies combined have delivered equipment to around 30,000 vessels globally.
“The acquisition strengthens our global presence and will give increased sales and service volumes. Kongsberg is a world leader within automation, navigation and control systems, whilst Rolls-Royce Commercial Marine is complementary with its deliveries of propellers, propulsion systems, handling systems and ship design,” said Håøy.
“Both companies hold leading positions within digitalization, ship intelligence and concepts for autonomy. By bringing together this we are positioning us as a significant strategic supplier of complete solutions for the future maritime industry”
Speaking to an investor presentation Håøy noted both companies were active in the area of developing autonomous shipping and "by combining that efforts we will strengthen that position going forward".
Rolls-Royce put its loss making commercial marine business up for sale in January this year having already undertaken substantial cost savings exercises at the division. The commercial marine business reported a negative EBITDA of GBP40m in 2017.
“This deal is good news for Rolls-Royce and Kongsberg and 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,” said Mikael Makinen, Rolls-Royce president, Commercial Marine.
Eivind Reiten, chair of the board of Kongsberg noted that the maritime industry still faced uncertaintities but technology and innovation are expected to be key drivers of growth.
"We believe its very good timing for this acquisition. We will increase our competitive strengths. We are establishing a very strong position for a market we believe will come back," Håøy said at the presentation. "On the offshore side we believe we have seen the bottom, timing is uncertainty, but we definitely see some light in that sector."
A main priority for Rolls-Royce marine's business going forward would be ensuring profitability.
The transaction is expected to close in Q1 2019.
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