Sunday times today26 Jul 2020 07:05
American buyout giants are vying to grab a £1bn division put up for sale by the struggling jet engine-maker Rolls-Royce.
Private equity firms Carlyle, KKR and Blackstone are understood to be targeting ITP Aero, the Spanish engineering division that makes turbine blades for the engines. Derby-based Rolls-Royce is scrabbling to raise cash after the grounding of global aviation obliterated its finances, sending its shares crashing 70% from the price a year ago. In a world of minimal flying, its power-by-the-hour model — where it sells engines at a loss but is paid based on how much they fly — has left it bleeding cash.
The aerospace giant is slashing costs, laying off 9,000 of its 52,000 staff and selling ITP. It plans to ask shareholders for up to £2bn within the next few months.
ITP is based in the Basque region, and any deal is likely to need the blessing of the Spanish government. Rolls-Royce last year held abortive talks about selling ITP to Spain’s Indra Sistemas for about €1.5bn (£1.3bn).
Rolls-Royce is understood to be considering offloading further assets alongside ITP to sweeten any deal.