Rolls-Royce has signed an agreement to sell its gas turbine and compressor business to Siemens for a £785 million cash consideration. Siemens says the acquisition, which is expected to be completed this year, will ‘close a technology gap in its extensive gas turbine portfolio.’

Rolls-Royce’s Energy gas turbine and compressor business supplies aero-derivative gas turbines, compressor systems and related services to customers in the oil and gas and power generation sectors. It has 2400 employees, and reported revenues of £871 million and earnings before interest and tax (EBIT) of £72 million in fiscal 2013.

Key Rolls-Royce technologies include its RB211 aero-derivative gas turbine (27 MW to 44 MW), which is predominantly deployed in oil and gas offshore power generation and onshore pipeline applications, the Trent 60 gas turbine range (52 to 66 MW), and the 501-K (3.9 to 6.4 MW) and Avon 200 (up to 17 MW) gas turbine engines, used for onshore power generation.

On completion of the transaction, Rolls-Royce will receive a further £200 million for a 25 year licensing agreement, granting Siemens exclusive access to Rolls-Royce aero-derivative turbine technology developments in the 4 to 85 MW power output range.

Rolls-Royce’s shareholding in the Rolls Wood Group (RWG) joint venture, that provides maintenance, repair and overhaul services, will also be transferred to Siemens on completion.

"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," said John Rishton, Rolls-Royce CEO.

The transaction has been approved by the boards of directors of Rolls-Royce and Siemens. Completion is expected before the end of December 2014, subject to closing conditions, including regulatory approvals.