Rolls-Royce is taking full control of one its key aerospace partners, paying €720m for the 53 per cent of Industria de Turbo Propulsores it does not already own.
ITP, which is the ninth largest aircraft engine and components company in the world by revenue, is based in Bilbao in Spain and employs 3,000 people worldwide writes the FT’s John Murray Brown. It has partnered Rolls-Royce on all its Trent engine programmes working on turbine technologies, with a particular expertise in super-alloys.
The deal will boost Rolls-Royce’s long-term aftermarket revenues, including from the high volume Trent 1000 and Trent XWB engines, where ITP has been a key risk and revenue sharing partner.
The purchase also adds to Rolls-Royce’s manufacturing and services capabilities on key defence programmes, such as the TP400, the world’s most powerful turboprop developed for use on the A400M Airbus military transport aircraft.
Monday’s announcement follows the decision by SENER Grupo de Ingenieria, currently the majority shareholder, to exercise its put option. Consideration will be settled over the two years following completion in eight equal evenly spaced instalments, with the option to take up to half the consideration in the form of Rolls-Royce shares. Completion, which is subject to regulatory clearances, is expected in early 2017.
ITP’s revenues were €710m last year, with net income of €59m. Gross assets at the end of 2015 were €1.7bn. Warren East, Roll-Royce chief executive, said:
This investment will add to our aerospace capability, with excellent facilities, services and products, to generate additional opportunities for profitable growth.