Rolls-Royce to Sell Military Helicopter-Engine Stake to Safran

Rolls-Royce Holdings Plc said it will receive 293 million euros ($382 million) in cash from the sale of half of a military helicopter-engine joint venture to partner Safran SA as it cleans up its holdings.

The sale will close before year-end and the work will transfer to Safran’s Turbomeca unit over three years, the London-based engine maker said today.

Rolls-Royce Chief Executive Officer John Rishton said he’ll continue honing the portfolio that has already led to the sale of its share in the International Aero Engines joint venture to United Technologies Corp. building V2500 engines for Airbus SAS A320s last year. Rolls-Royce has also disposed of tidal-power generation and fuel-cell activities.

“Our partners didn’t want to continue to invest in the development of a line of product that’s outside their core strategy,” Safran Chief Executive Officer Jean-Paul Herteman told journalists on a call to discuss earnings. “We wanted to develop the position.”

The RTM322 engine powers helicopters such as the EH101 troops transport chopper and British Apache attack helicopters. Herteman said the business is “a promising sector,” especially with growth in heavy helicopters used in the oil and gas markets.

“This allows Safran to strength Turbomeca’s position in high-power engines whereas until now, their expertise was really in smaller turbines,” said Yan Derocles, an analyst at Oddo Securities in Paris.

Safran said it will add about 85 million euros in annual revenue by acquiring the Rolls-Royce share.

The two companies will continue to cooperate on the Adour engine powering the Hawk jet trainer aircraft. Rolls-Royce said its other helicopter activities, including the joint venture with Honeywell building the LHTEC CTS800 for AgustaWestland AW150 Wildcat helicopters, are unaffected.

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