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Rolls’ Bergen Engines Sale Blocked on Security Concerns

March 24, 2021
Norway will bar the $178-million sale of Rolls-Royce’s gas and diesel engine business to a Russian locomotive manufacturer, stating the manufacturing business “would have been of significant military strategic interest”.

Rolls-Royce Plc’s planned, $178-million sale of its Bergen Engines subsidiary to the Russian company TMH Group has been blocked by the Norwegian government, which cited its national security concerns. “The technology possessed by Bergen Engines, and the engines they produce, would have been of significant military strategic interest to Russia, and would have boosted Russian military capabilities,” the Norwegian government stated.

Bergen Engines, which produces gas and diesel engines for ships and power generation, has been a Rolls-Royce holding since 1999. It has approximately 950 employees, mostly in Bergen, Norway, where it is headquartered and operates a foundry, engine factory, and service operation. It also has service operations in seven other countries.

Rolls has made Bergen Engines available as part of a broad sale of assets by which it aims to raise about $2.75 billion. It announced the sale agreement with TMH Group in February.

TMH Group is a Russian holding company and one of the world’s largest manufacturers of locomotives and railroad components and systems. It manufactures medium-speed engines for rail applications, and the purchase of Bergen Engines was reportedly part of a diversification strategy.

Rolls-Royce stated it remains committed to selling Bergen Engines, noting it followed the appropriate process in contacting the authorities in advance of the February sale announcement, and co-operated with the government’s subsequent review process.

The group added it seek Norwegian government assistance to find another suitable buyer that “can provide Bergen Engines and its people with the investment required for the future and Rolls-Royce with an appropriate outcome.”