Rolls-Royce reaches agreement-in-principle with Deutz AG to take over the lower-power-range engines business
Posted on December 13, 2023
Rolls-Royce and Deutz AG are in positive discussions for the sale of the off-highway engines business in the lower power range up to 480 kW to Deutz AG for a price in the high double-digit million Euros. This relates to diesel engines and engine systems using Daimler technology which are developed and manufactured by Daimler Truck AG for Rolls-Royce Power Systems to its specifications and used mainly in agricultural vehicles and construction machinery, not in rolling stock or in military vehicles.
Rolls-Royce recently presented its strategy to become a high performing, competitive, resilient and growing business to investors. In the Power Systems division the focus will be on the strategic growth areas of power generation, governmental, marine, service and the future field of battery energy storage systems.
Tufan Erginbilgic, CEO, Rolls-Royce plc, said: “This is a clear illustration of our strategy in action. Becoming more focused on the markets where we know Rolls-Royce can win. Power Systems is an integral part of our organisation with a strong brand and real advantage in power generation, governmental and marine end-markets, where we see the strongest demand and an opportunity for better returns from our power-dense and reliable solutions.”
Dr. Jörg Stratmann, CEO of Rolls-Royce's Power Systems, said: “As we evolve our strategy, we are also constantly analysing our product portfolio. As a result, we will be concentrating largely on higher-powered systems in the off-highway engine sector, primarily from our in-house production. We have therefore decided to transfer our successful lower-power-range engines business, which uses Daimler technology, to a partner.”
Until the transfer of the business is complete, Rolls-Royce's Power Systems division will continue its activities in this business segment unchanged in such a way that customer relationships, delivery and service obligations remain unaffected. Following a final agreement, the closing – subject to regulatory approvals – is expected from mid-2024.
Rolls-Royce Power Systems currently has exclusive rights to the global distribution of off-highway engines using Daimler technology (MDEG, HDEP and Classic engine platforms), with the original contract term set to expire in April 2028.
The products under negotiation are the Series 1000, 1100, 1300 and 1500 engines and the Classic Series OM900 and OM460 in the 75 to 480 kW power range, albeit specifically not those used in rail or military vehicle applications. The total number of people employed in this part of the business is in double-digit figures.
About Rolls-Royce Holdings plc
- Rolls-Royce develops and delivers complex power and propulsion solutions for safety-critical applications in the air, at sea and on land. Our products and service packages enable our customers to connect people, societies, cultures and economies together; they meet the growing need for power generation across multiple industries; and enable governments to equip their armed forces with the power required to protect their citizens.
- 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. To meet customer demand for more sustainable solutions, we are committed to making our products compatible with net zero carbon emissions.
- Annual underlying revenue was £12.69bn in 2022 and underlying operating profit was £652m.
- Rolls-Royce Holdings plc is a publicly traded company (LSE: RR., ADR: RYCEY, LEI: 213800EC7997ZBLZJH69)
- Rolls-Royce Power Systems is headquartered in Friedrichshafen in southern Germany and employs more than 9,500 people. The product portfolio includes mtu-brand high-speed engines and propulsion systems for ships, power generation, heavy land, rail and defence vehicles and for the oil and gas industry as well as diesel and gas systems and battery containers for missioncritical, standby and continuous power, combined generation of heat and power, and microgrids and is intensively engaged in the development of climate-neutral solutions.