Rolls-Royce has signed a definitive agreement to sell 100 per cent of ITP Aero to Bain Capital Private Equity, which is leading a consortium of investors of Spanish and Basque companies including SAPA and JB Capital.
The transaction is valued at approximately €1.7 billion.
ITP Aero is an aerospace and engine component supplier with capabilities in design, research and development, manufacturing and casting, assembly and testing of aeronautical modules and engines for commercial aviation and defence applications. It also provides MRO services for a range of business jet and defence engines.
The proposed sale is part of Rolls-Royce’s disposal programme, which aims to raise proceeds of at least £2 billion.
Rolls-Royce added that the sale was in line with its 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 €1.7 billion, 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 €1.8 billion. The transaction has been approved by the Rolls-Royce board and the consortium members and is subject to certain closing conditions, including customary regulatory clearances.
The deal is expected to close in the first half of 2022.
Bain Capital Private Equity said it would invest in growing ITP Aero’s products, regions and customers, while further diversifying its customer base and supporting the next generation of aircraft, including in sustainable and low carbon technologies.
“Today’s announcement is a significant milestone for our disposal programme as we work to strengthen our balance sheet, in support of our medium-term ambition to return to an investment grade credit profile,” said Rolls-Royce’s CEO Warren East.
“This agreement represents an attractive outcome for both Rolls-Royce and ITP Aero and we are also grateful to the Spanish and Basque governments for the constructive discussions we have held with them during the process.
“The creation of an independent ITP Aero is a great opportunity for the company, its people and other stakeholders. A financially, technologically, and industrially strong ITP Aero is also vital to Rolls-Royce. The company will remain a key strategic supplier and partner for decades to come. We believe we have selected new owners willing to support the business for the long-term and build on its successful track record.”
ITP Aero’s CEO Carlos Alzola commented: “This transaction is a significant moment for all of us at ITP Aero. We will be able to further strengthen our position in the aerospace industry, continue to provide high levels of innovation and service to our customers and expand our business to capture significant growth opportunities.
“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.”
Earlier this year, Rolls-Royce’s former site at Hucknall, UK, was integrated into the ITP Aero business.