TIDMRR.
RNS Number : 0792N
Rolls-Royce Holdings plc
27 September 2021
27 September 2021
ROLLS-ROYCE SIGNS AGREEMENT TO SELL ITP AERO
-- Rolls-Royce has signed a definitive agreement to sell 100% of
ITP Aero for approximately EUR1.7bn to Bain Capital Private Equity,
which is leading a consortium of Spanish and Basque companies
including SAPA and JB Capital.
-- Agreement is a key element of Rolls-Royce's disposal
programme to help rebuild balance sheet and support medium-term
ambition to return to investment grade credit profile.
-- Bain Capital will help drive ITP Aero's industrial plan as a
means to ensure continuity and guarantee the maintenance of
workforce levels. It intends to further grow the business, which
will remain a key long-term strategic supplier to Rolls-Royce.
-- ITP Aero will be an independent business led by current CEO
Carlos Alzola with headquarters and decision making remaining in
Zamudio, Spain.
-- Rolls-Royce, Bain Capital and ITP Aero are pleased with the
constructive dialogue conducted for this transaction with the
Spanish and Basque governments.
Rolls-Royce (LSE:RR., ADR:RYCEY) announced today that it has
signed a definitive agreement to sell 100% of ITP Aero to Bain
Capital Private Equity, which is leading a consortium of investors,
for approximately EUR1.7 billion. The consortium includes interests
to be held by Spanish co-investors SAPA and JB Capital.
The proposed sale is a key element of Rolls-Royce's disposal
programme, announced on 27 August 2020, to raise proceeds of at
least GBP2.0 billion, and is consistent with the company's strategy
of reducing capital intensity while maintaining a key long-term
strategic supply relationship. Rolls-Royce will receive total cash
proceeds (excluding any cash retained by Rolls-Royce) of
approximately EUR1.7 billion, which will be used to help rebuild
the Rolls-Royce balance sheet, in support of the company's
medium-term ambition to return to an investment grade credit
profile. The proposed sale values ITP Aero at an enterprise value
of approximately EUR1.8 billion. The transaction has been approved
by the Board of Rolls-Royce and the consortium members and is
subject to certain closing conditions, including customary
regulatory clearances. It is expected to close in the first half of
2022.
The consortium's vision for an independent ITP Aero is to invest
in growing the company's products, regions and customers and
further enhance its status as a Spanish national champion. ITP
Aero's partnership with Bain Capital and the consortium will allow
it to further drive its strategy to be a pioneer of new
technologies and world class manufacturing enabled by a highly
skilled workforce. This strategy will see ITP Aero maintain and
grow its position as a leading supplier of critical engine
components to key civil aviation and defence aircraft platforms,
further diversifying its customer base and supporting the next
generation of aircraft, including in sustainable and low carbon
technologies. The consortium fully recognises the importance of ITP
Aero to Spain, the Basque Country, and the Spanish Government.
Rolls-Royce, the Bain Capital-led consortium and ITP Aero are
pleased with their discussions with the Spanish and Basque
governments about this transaction. The consortium led by Bain
Capital supports the maintenance of jobs as well as the company's
future growth. Bain Capital is also open to negotiate the
incorporation of further Spanish and Basque industrial partners in
the consortium, representing up to 30% of the equity, until the end
of June 2022.
Warren East, CEO, Rolls-Royce, said: "Today's announcement is a
significant milestone for our disposal programme as we work to
strengthen our balance sheet, in support of our medium-term
ambition to return to an investment grade credit profile. This
agreement represents an attractive outcome for both Rolls-Royce and
ITP Aero and we are also grateful to the Spanish and Basque
Governments for the constructive discussions we have held with them
during the process. The creation of an independent ITP Aero is a
great opportunity for the company, its people and other
stakeholders. A financially, technologically, and industrially
strong ITP Aero is also vital to Rolls-Royce. The company will
remain a key strategic supplier and partner for decades to come. We
believe we have selected new owners willing to support the business
for the long-term and build on its successful track record. We look
forward to continuing to work closely with Carlos and our
colleagues at ITP Aero in the future."
Carlos Alzola, CEO, ITP Aero, said: "This transaction is a
significant moment for all of us at ITP Aero. We will be able to
further strengthen our position in the aerospace industry, continue
to provide high levels of innovation and service to our customers
and expand our business to capture significant growth
opportunities. All of us at ITP Aero are eager to start the next
chapter of our story as an independent company with a strong
strategic plan and financial support behind us - building on our 30
years of success - to create a global leader in aerospace that is
headquartered in the Basque Country in Spain. Our success is built
on the effort of all of our colleagues around the world and I would
like to thank each of them for their continued dedication."
Ivano Sessa, Managing Director, and Tobias Weidner, a Principal,
at Bain Capital Private Equity, said: "ITP Aero has a great track
record in an industry which is vital to the global economy, with
attractive long-term growth potential. We see significant potential
in further accelerating ITP Aero's growth trajectory and
investments in new technologies. Together with our partners SAPA
and JB Capital we think we bring a unique understanding and ability
to support ITP Aero. We look forward to working with ITP Aero's
management, employees and other stakeholders including the Spanish
and Basque governments to realise the significant growth potential
that ITP Aero has as an independent company."
In the year ended 31 December 2020, ITP Aero reported revenues
of EUR735 million and underlying EBIT of EUR40 million. Earlier
this year, Rolls-Royce's former site at Hucknall, UK, was
integrated into the ITP Aero business, with a structured plan to
include the associated fabrications commodity supply chain in the
short term. For the year ended 31 December 2020, the combined
perimeter generated a pro-forma profit (loss) before tax(1) of
EUR(17) million, with pro-forma gross assets(2) of EUR1.95 billion
at 31 December 2020.
(1) Pro-Forma Profit Before Tax: Pro-forma Profit Before Tax
attributable to ITP Aero and the transferred Hucknall sites and
Fabrications commodities. The pro-forma Profit Before Tax excludes
an EUR(108)m impact related to the in-year amortisation of the
Purchase Price Allocations that arose following the Rolls-Royce
acquisition of ITP in December 2017 and also excludes a EUR6m
profit in relation to the deferred tax asset described under Gross
Assets; both of them are only applicable to consolidated
Rolls-Royce Group results.
(2) Gross Assets: Pro-forma Gross Assets attributable to ITP
Aero and the transferred Hucknall sites and Fabrications
commodities. The pro-forma Gross Assets excludes EUR1.042 billion
of Purchase Price Allocations that arose following the Rolls-Royce
acquisition of ITP in December 2017, and a further EUR18 million
consolidation adjustment, which includes a deferred tax impact;
both of them are only applicable to consolidated Rolls-Royce Group
results.
Adjusted EBITDA for the combined perimeter was EUR119m for the
year to end December 2020 and is considered as the combination of
ITP Aero's adjusted EBITDA and the pro-forma reported EBITDA of the
Hucknall perimeter with associated fabrications supply chain,
adjusted for the post-transaction supply agreement, perimeter carve
out adjustments, restructuring costs and due diligence
adjustments.
For further information, please contact:
Rolls-Ro yce
Media
Richard Wray
Director of External Communications & Brand, Rolls-Royce
plc
Tel +44 (0) 7810 850055
Richard.Wray@Rolls-Royce.com
Teresa Towner
External Corporate Communications Manager, Rolls-Royce plc
Tel: +44 (0) 7971 832 542
Teresa.Towner@Rolls-Royce.com
Investors
Isabel Green
Head of Investor Relations, Rolls-Royce plc
Tel +44 (0) 7880 160976
Isabel.Green@Rolls-Royce.com
www.rolls-royce.com
ITP Aero
Media
Susana Herrero
Head of Communications, ITP Aero
Tel: +34 610 260 992
Susana.herrero@itpaero.com
https://www.itpaero.com
Bain Capital
Media
Georgina Whittle
Associate Partner, Camarco
Tel: +44 (0)20 3757 4987
Tel: +44(0)7835 770 967
baincapital@camarco.co.uk
Violet Wilson
Senior Consultant, Camarco
Tel: +44 (0)203 781 8338
Tel: +44 (0)7875 841 477
baincapital@camarco.co.uk
About Rolls-Royce Holdings plc
1. Rolls-Royce pioneers the power that matters to connect, power
and protect society. We have pledged to achieve net zero greenhouse
gas emissions in our operations by 2030 (excluding product testing)
and joined the UN Race to Zero campaign in 2020, affirming our
ambition to play a fundamental role in enabling the sectors in
which we operate achieve net zero carbon by 2050.
2. Rolls-Royce has customers in more than 150 countries,
comprising more than 400 airlines and leasing customers, 160 armed
forces and navies, and more than 5,000 power and nuclear
customers.
3. Annual underlying revenue was GBP11.76 billion in 2020 and we
invested GBP1.25 billion on research and development. We also
support a global network of 28 University Technology Centres, which
position Rolls-Royce engineers at the forefront of scientific
research.
4. Rolls-Royce Holdings plc is publicly traded company (LSE:
RR., ADR: RYCEY, LEI: 213800EC7997ZBLZJH69)
About Bain Capital, LP
Bain Capital, LP is one of the world's leading private
investment firms with approximately $140 billion of assets under
management that creates lasting impact for our investors, teams,
businesses, and the communities in which we live. Since our
founding in 1984, we've applied our insight and experience to
organically expand into several asset classes including private
equity, credit, public equity, venture capital and real estate,
with offices on four continents. Read more at baincapital.com.
About ITP Aero
ITP Aero is currently one of the leading aerospace and engine
component suppliers in the world, employing approximately 4,300
people at its production centres in Spain, UK, Mexico, Malta and
India. ITP Aero's activities include the design, research and
development, manufacturing and casting, assembly and testing of
aeronautical modules and engines for commercial aviation and
defence applications. It also provides maintenance repair and
overhaul (MRO) services for a wide range of business jet and
defence engines, including providing MRO services to the Spanish
Ministry of Defence. It has partnered with Rolls-Royce on all Trent
civil aero engine programmes, manufacturing low pressure turbines,
and is a partner on Rolls-Royce next generation UltraFan(R) engine.
ITP Aero also designs and manufactures aeronautical modules and
components for Pratt & Whitney, General Electric and Honeywell.
In defence applications, ITP Aero is a consortium member for the
engines powering the Eurofighter Typhoon, the A400M and the Tiger
helicopter. Earlier this year, ITP Aero was confirmed as a main
partner for the development of the engine for the FCAS programme.
ITP Aero is led by Chief Executive, Carlos Alzola.
About SAPA
The SAPA Group is a leader in technologies for the mobility of
heavy vehicles in the field of Defense and has facilities in
Andoain (Gipuzkoa) and Detroit (Michigan). It is one of the most
recognized companies both in wheeled and tracked transmissions for
heavy vehicles and in energy generation, storage and distribution
systems for them. It is a company with a long tradition and
relationship with the Defense industrial sector, mainly in Spain,
which has participated with its own technology in vehicle programs
that the Ministry of Defense has launched in recent years.
About JB Capital
JB Capital is an independent financial services firm. Founded in
2008 by Javier Botín, its current chairman, JB Capital has a team
of experienced professionals and access to a broad base of
institutional investors and companies globally to whom it provides
services in equity and fixed income markets, investment banking and
asset management, with a deep knowledge of the Spanish and
Portuguese markets.
Note on forward-looking statements
This press release may contain projections and forward-looking
statements. The words "believe", "expect", "anticipate", "intend"
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not prove to be accurate. The forward-looking statements in this
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the Company assumes no obligation to update or provide any
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financial, credit and other related aspects of the transaction in
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