Rolls-Royce May Need ‘Tough’ Activist for Change, Fund Says

Rolls-Royce Holdings Plc has come under attack from shareholder Sequoia Fund Inc., accusing the U.K. manufacturer of destroying shareholder value by branching out from its jet-engine business, which may require a “tough-minded activist” investor to push through a change.

Rolls-Royce has expanded marine-engine and power-generation business, even as those operations face increasing competition from low-cost Asian producers, Sequoia’s managers, Robert Goldfarb and David Poppe, wrote in the fund’s annual report. In large jet engines, the company enjoys a de-facto duopoly with General Electric Co., with no new rival in sight.