Rolls-Royce share price: UK firm no longer in bid talks with Wartsila

on Jan 9, 2014
Updated: Oct 21, 2019
Listen, Thursday, January 9: Rolls-Royce Holding plc (LON:RR) today said it has approached Wartsila (HEL:WRT1V) over a possible offer for the Finnish engineering company, but the talks have ended without a deal.

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“Rolls-Royce notes the recent press speculation and confirms that it has been in preliminary discussions with the Board of Wartsila regarding a possible offer for the company. However, those discussions are no longer continuing,” the London-based group said in a statement. Helsinki-based Wartsila also confirmed that talks to buy the company are no longer active.

“We confirm the approach by Rolls-Royce with a preliminary proposal for a possible offer for the company,” Wartsila said in a statement today. “In case the company receives such proposals, the Wartsila board has an obligation to evaluate them”.
Media reports yesterday said that Rolls-Royce, the world’s second-largest aircraft engine maker behind General Electric, was in talks with Wärtsilä to buy its marine engine division, which generated 18 percent of the Helsinki-listed company’s sales of €1.3 billion (£1.07 billion) in 2012.

Rolls-Royce’s share price has fallen 1.32 percent to 1,269.00p as of 11:43 UTC, valuing the group at £23.86 billion. This compared with a 0.5 percent drop in the Industrials sector and a 0.27 rise in the benchmark FTSE 100 index.
Rolls-Royce, best known for manufacturing engines for commercial aircraft such as Boeing and Airbus, is
also a big producer of power equipment and increasingly focused on the marine industry. Buying Wartsila would have strengthened Rolls-Royce’s marine business, which lowered its profit guidance in November. In 2011 Wartsila acquired Hamworthy, a specialist UK maker of marine equipment.

The Finnish company, which has a market capitalisation of around €6.7 billion (£5.5 billion), derives most of its annual revenue of €4.7 billion (£3.9 billion) from making power-generation equipment for liquid-fuel and gas power plants as well as making engines for ships. It also has a services business.

Acccording to Liberum Capital analyst Ben Bourne, Wartsila is an appealing takeover target as a leader in marine propulsion systems. “If you were Rolls-Royce, why would you not look at that opportunity?” he said. “You could become the dominant player in both civil aircraft wide-body engines and also marine engines. Seems perfectly sensible at the right price.”
Analysts at Bank of America Merrill Lynch commented that Rolls-Royce could afford to pay £7.8bn for Wartsila, whose businesses would have complemented Rolls-Royce’s operations in both marine engines and power plants.
RBC Capital Markets analyst Rob Stallard said that the news of the takeover talks between Rolls-Royce and Wartsila indicated the UK company is seeking new mergers and acquisitions.
**As of 11:58 UTC buy Rolls-Royce shares at 1,271p.**
**As of 11:58 UTC sell Rolls-Royce shares at 1,270p.**
Trade stocks with Hargreaves Lansdown from £5.95 per deal.
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