Rolls-Royce has signed a definitive agreement to sell 100% of its Spanish aero engine operation ITP Aero to Bain Capital Private Equity
As part of a bid to raise funds of at least £2bn, Rolls-Royce announced today (September 27) that it has signed a definitive agreement to sell 100% of ITP Aero to Bain Capital Private Equity for approximately €1.7bn. Bain Capital is leading a consortium of investors that includes Spain’s JB Capital and SAPA.
The proposed sale is a key element of Rolls-Royce’s disposal programme, announced on August 27, 2020, 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 €1.7bn, 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 €1.8bn. 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 develop 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 supports the maintenance of jobs as well as the company's future growth. Bain Capital is also open to negotiating 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.
“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,” said CEO Carlos Alzola.
In the year to December 31, 2020, ITP Aero reported revenues of €735m and underlying EBIT of €40m. 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