- Bergen makes engines for ships and power plants
- Company generated about €250m in revenue last year
Rolls-Royce's (RR) shares climbed 4 per cent after the engine maker said it had completed the sale of its Bergen Engines business to Langley Holdings.
The aero engine supplier was one of a number of travel-linked companies whose shares rebounded as evidence suggests that the Omicron coronavirus variant is proving to be more transmissable though less deadly than the previously-dominant Delta variant.
Rolls-Royce said it expects proceeds of €91m (£76m) from the Bergen Engines sale. It will also retain €16m of cash. The money will be used to pay down debt.
The deal is the latest of a series of disposals by Rolls-Royce, which include the €1.7bn sale of its ITP Aero business in Spain in September to Bain Capital Private Equity, as it looks to rebuild its balance sheet.
The company said in August 2020 it expects to raise €2bn from asset sales as it bids to regain an investment-grade credit rating it lost a month earlier after Moody’s downgraded its debt.
Bergen Engines is based in Norway and makes medium-speed engines used in ships and power plants. The company employs 950 people and generated about €250m of revenue last year.
Rolls-Royce's shares have see-sawed in recent months as good news about contract wins for the US military and funding for its small modular reactor consortium has been offset by renewed disruption to long-haul travel.
The company’s shares currently trade at 23 times FacSet forecast earnings, but a recovery in aviation should help to improve earnings and bolster ongoing efforts to repair its balance sheet. We maintain our buy recommendation.