MADRID/LONDON (Reuters) -Rolls-Royce is set to sell its Spain-based ITP Aero unit to U.S. private equity firm Bain Capital and Spanish group Sener for 1.6 billion euros ($1.9 billion), a Spanish newspaper said, in a deal that would boost the British company’s finances.
Engine-maker Rolls-Royce wants to sell 2 billion pounds ($2.8 billion) worth of assets to help repair its balance sheet after the pandemic forced it to take on huge new debts. ITP is the biggest asset on the block.
A price tag of 1.6 billion euros would beat the 1.5 billion at which reports have valued ITP, a turbine blade-maker, which will remain a supplier to Rolls-Royce after the deal.
Spanish paper Expansion reported news of the ITP sale on Wednesday, citing financial sources.
Should the deal materialise, it would be reassuring for shareholders keen to see the asset disposal programme, started almost a year ago, make progress after only minor sales to date.
Bank of America analysts wrote in a recent note: “We do see risk that Rolls is running below its target in disposal proceeds, and we think this could become an increasing concern for investors.”
Expansion said both the Spanish government and authorities in the Basque region, where ITP Aero is based, looked favourably on a sale to Bain and Sener.
Sky News had previously reported that rival Spanish aerospace group Aciturri was planning its own bid, while financial buyers KKR and TowerBrook Capital had also been reported to be in the running.
Rolls-Royce and Bain Capital declined to comment. Sener could not immediately be reached for comment.
Earlier on Wednesday, Rolls-Royce agreed to sell its much smaller Norwegian unit Bergen to a new buyer, five months after a deal with a Russian company was blocked by Norwegian authorities.
Shares in the British group, which is due to report first-half results on Thursday, were up 1.6% to 104.7 pence in late deals.
($1 = 0.8409 euros)
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(Reporting by Nathan Allen and Sarah YoungEditing by Alison Williams and Mark Potter)
