Norwegian technology and engineering firm Kongsberg has agreed to buy the marine division of struggling British engineering firm Rolls-Royce for an enterprise value of about £500m ($662m) and a net value of between £350 and £400m.
Both companies have been making strides in autonomous vessel developments in recent years.
In a press statement Kongsberg said that while there have been demanding market conditions, and there is still uncertainty, the industry is facing a period of growth where technology and innovation will be key drivers.
“For more than 200 years Kongsberg has been a pioneer for high technology industrial development with a long term perspective. The acquisition of Rolls-Royce Commercial Marine is in line with our growth ambitions”, said Eivind Reiten, Kongsberg chairman.
In the same press statement Kongsberg CEO and President Geir Håøy said the acquisition makes Kongsberg a more complete supplier to the maritime industry. “The maritime industry is becoming increasingly globalized and is undergoing considerable technological and market driven changes. With this acquisition we will strengthening our strategic position with shipowners, shipyards and other customers and partners.”
“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. 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,” said Håøy.
Kongsberg is headquartered in Kongsberg, Norway, and has clients in the oil and gas industry, merchant marine, defence and aerospace sectors. It employs 7,000 people in 25 countries and reported a NKr 14.5bn ($1.8bn) turnover in 2017. Rolls-Royce Commercial Marine has about 3,600 employees, with revenue of £817m in 2017. There have been a series of redundancies over the last three years as the company struggled financially. The deal is expected to be closed in the first quarter 2019.
Rolls-Royce had been looking to sell Rolls-Royce for about two years, and said the sale “includes propulsion, deck machinery, automation and control, a service network spanning more than 30 countries and ship design capability, which to date has seen around 1,000 ships of Rolls-Royce design delivered to offshore, cargo, passenger and fishing vessel customers worldwide. Rolls-Royce’s Ship Intelligence activities, which have seen the rapid development of technologies to enable remote and autonomous operation of commercial vessels, are also included”.
This is the latest news regarding consolidation of technology firms in the maritime sector. Over recent years since the financial crisis, Helsinki-listed Wärtsilä, which had been linked with a possible purchase of Rolls-Royce earlier in the year, acquired privately-owned Transas, SAM Electronics, Hamworthy Engineering, Eniram and other smaller firms active in marine environmental or digital arenas.