Rolls-Royce Says Talks Progressing on ValueAct Board Seat

  • U.K. aero-engine manufacturer says no decision taken as yet
  • Newspaper report says fund's C00 is directorship candidate

Rolls-Royce Holdings Plc said talks are under way over granting activist shareholder ValueAct Capital Management a seat on the troubled aircraft engine maker’s board, though nothing has been decided.

ValueAct owns 10 percent of Rolls, making it the No. 1 investor in a company whose stock has declined 30 percent in a year. Bradley Singer, The U.S. firm’s chief operating officer, is being mooted for the directorship, and the move may be put to Rolls’s annual meeting May 5, the Financial Times said Wednesday.

“We’re engaged in constructive discussions with ValueAct and no decision has yet been taken by the board,” Rolls-Royce spokesman Richard Wray said in an e-mailed statement. He didn’t comment on the likelihood of Singer getting a seat. The FT didn’t say where it got its information.

ValueAct said Nov. 12 that it continued to regard Rolls as a sound long-term investment even after the U.K. engineer’s latest guidance saw the stock fall 20 percent in a day, and was building relations with Chief Executive Officer Warren East and Chairman Ian Davis. The San Francisco-based firm lifted its holding to 10 percent later that month, having gone above 5 percent in June.

Rolls-Royce stock gained 14 percent Friday after East reported earnings in line with estimates, halted a run of five profit warnings and said the business is showing signs of stability after a management shakeup and job cuts.

London-based Rolls was still compelled to halve dividend payments to preserve cash as it grapples with declining markets for offshore oil vessels, regional jets, business aircraft and older wide-body airliners.

A surge in engine output for the latest Airbus Group SE and Boeing Co. models is set to spur sales but won’t have a major impact on earnings until the turbines begin generating lucrative maintenance revenue.

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