Siemens mdash which designed and built this 375MW gas turbine said to be ldquothe worlds biggest and most powerfulrdquo mdash will add the RollsRoyce Energy assets including aeroderivative gas turbine and compressor businesses

Siemens — which designed and built this 375-MW gas turbine, said to be “the world`s biggest and most powerful” — will add the Rolls-Royce Energy assets, including aero-derivative gas turbine and compressor businesses.

Siemens Buying Rolls-Royce Gas Turbine, Compressor Business

$1.32-billion deal strengthens position in oil-and-gas, power generation Rolls-Royce concentrating on aero, diesel engines Siemens streamlines organization

As expected, Siemens AG agreed to buy Rolls-Royce Holdings’ gas turbine and compressor business for an estimated $1.32 billion, in cash. The sale had been reported for several weeks, and both companies directors have already approved it. While Siemens stated the acquisition would strengthening its position in the oil-and-gas industry, and in the decentralized power generation business, it also highlights Rolls’ renewed-emphasis on aircraft and industrial engine technologies – highlighted by its purchase in March of Daimler AG’s half interest in their heavy-duty diesel engine business.

“This agreement will give the Energy business greater opportunities as part of a much larger energy company and allows Rolls-Royce to concentrate on the areas of business where we can add most value,” stated John Rishton, Rolls-Royce Holdings CEO.

Rolls detailed that the sale includes a 25-year licensing agreement giving Siemens access to relevant Rolls-Royce aero-derivative technology for the 4- to 85-MW power output gas turbine range.

The Rolls-Royce Energy business being sold has about 2,400 employees and contributed an estimated $1.48 billion in revenue with profits of $122 million in 2013.

Siemens’ Energy sector has about 83,500 employees, and 2013 revenues of $37 billion, with $2.6 billion in profits.

The transaction is expected to close before the end of 2014, subject to regulatory approvals.

The sale does not include some of Rolls-Royce’s smaller, Power Generation sector assets, but its stake in the Rolls Wood Group (RWG) joint venture (providing MRO services), will be transferred to Siemens.

In addition to the purchase, Siemens unveiled a reorganization plan, Siemens – Vision 2020, by which it will position itself in three categories — electrification, automation and digitalization — which it has identified for maximum long-term growth.

As of October 1, 2014, the organization will eliminate its “Sector” level and combine all its businesses into nine Divisions, instead of the current 16. The Siemens Healthcare business will be managed separately in the future.

Siemens predicted the reorganization would increase annual productivity by an estimated $1.4 billion by the end of FY 2016.

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