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Rolls-Royce, the turbine and engine maker, is to acquire the 50 per cent of shares it does not already own in Aero Engine Controls, its joint venture with Goodrich Corporation, in a deal that could be worth about £30m, including debt.
AEC was set up in 2009 to combine the controls businesses of Rolls-Royce and Goodrich, and designs and manufactures systems including electronic engine controllers, fuel pumps and fuel metering units for a wide range of Rolls-Royce engines.
Such systems play an increasingly important part in enhancing the fuel efficiency and overall performance of modern jet engines, and Rolls-Royce was keen to take full control of the unit.
“This acquisition will give Rolls-Royce full ownership of a critical capability that confers competitive advantage,” the company said.
Rolls-Royce has agreed the deal with United Technologies, which is in the process of acquiring Goodrich, and the deal will not go through until the latter transaction is complete.
Under the terms of the deal with UTC, Rolls-Royce will assume full responsibility for AEC’s external debts of roughly £54m and its pension deficit of about £1m, as well as paying 50 per cent of the audited net asset value of AEC once the UTC’s acquisition of Goodrich is complete. At the end of 2011, AEC’s net assets stood at roughly £8m.
Analysts at Citi said they “would not rule out” AEC’s net asset value being reassessed in the aftermath of a successful purchase of Goodrich by UTC.
But Rolls-Royce said the deal would have “no material impact” on this year’s financial performance.
Shares in Rolls-Royce were down 1.3 per cent, in line with the market, at 817.5p in early morning trading in London.