UK-based Rolls-Royce has agreed to sell its energy gas turbine and compressor business to Siemens for £785m ($1.3bn).
The business that will be sold provides aero-derivative gas turbines, compressor systems and associated services to firms operating in the oil and gas and power generation sectors.
Following the transaction, Rolls-Royce will receive an additional £200m for a 25-year licensing agreement, allowing Siemens access to the relevant company's aero-derivative technology for use in the 4 to 85MW power output gas turbine range.
Rolls-Royce employs around 2,400 people within its energy gas turbine and compressor business segment and in 2013, it contributed £871m in revenue and £72m of underlying profit.
After completion of the transaction that excludes certain smaller power generation sector assets, Rolls-Royce's shareholding in the Rolls Wood Group (RWG) joint venture, which provides maintenance, repair and overhaul services, will be transferred to Siemens.
Rolls-Royce CEO John Rishton said, "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."
Subject to closing conditions, including regulatory approvals, the transaction is expected to be completed before the end of December 2014.
Image: Industrial gas turbine from Rolls-Royce. Photo: courtesy of Rolls-Royce plc.