Rolls-Royce Holdings (LON:RR) has inked a deal to sell its commercial marine business, the blue-chip engine maker has said. The move comes amid an ongoing restructuring at the company which will see the group cut 4,600 jobs in an effort to boost its profitability.
Rolls-Royce’s share price has fallen into the red in today’s session, having given up 0.67 percent to 979.00p as of 08:57 BST. The stock is underperforming the broader UK market, with the benchmark FTSE 100 index having climbed into positive territory and currently standing 0.18 percent higher at 7,616.94 points.
Commercial marine business sale
Rolls-Royce announced in a statement this morning that it had signed an agreement to sell its Commercial Marine business, to Norway-based Kongsberg. The enterprise value of the deal is £500 million, with net proceeds expected to come in between £350 million and £400 million. The blue-chip group noted that it will use the proceeds to bolster its balance sheet “and provide additional capital to judiciously pursue opportunities that will drive greater returns”.
The deal is expected to close in the first quarter of next year, subject to regulatory clearance.
Disposal follows strategic review
The move followed the engine maker’s review of its Commercial Marine operations announced earlier this year.
“This transaction builds on the actions we have taken over the last two years to simplify our business,” Rolls-Royce’s chief executive Warren East commented in the statement, adding that the sale would allow the group to focus on its core businesses.
The sale comes after earlier this week, Japanese airline ANA Holdings said that it will cancel 113 domestic flights to inspect Rolls-Royce’s engines.
The FTSE 100 group is scheduled to update investors on its half-year performance on August 2.