Rolls-Royce Holdings PLC (LSE:RR.) said it has made a “major win” after the US Air Force selected its F130 engine to power the B-52 Stratofortress for the next 30 years, and later confirmed it has also struck a GBP1.45bn deal to sell its ITP Aero arm.
The FTSE 100 group said it has signed a definitive agreement to sell 100% of ITP Aero for EUR1.7bn cash to a consortium led by private equity group Bain Capital.
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Rolls said the sale is a “key element” of the GBP2bn disposal programme it announced last August and is “consistent with the company’s strategy of reducing capital intensity while maintaining a key long-term strategic supply relationship”.
The deal is expected to close in the first half of 2022.
Meanwhile, the USAF selected Rolls F130 engine “after a vigorous multi-year competition” after its commercial family of engines accumulated more than 27mln engine flight hours, with one variants already being used in the US Air Force’s C-37 and E-11 BACN aircraft.
The engine maker will build and test the F130 models at its facility in Indianapolis, Indiana, which recently underwent a US$600mln refurbishment programme.
Some 650 engines will be produced at the site, creating 150 new jobs.
Chief executive Warren East said the ITP deal “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”.
“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.”
Rolls shares had rocketed up 11% to 147.44p by lunchtime on Monday.
