Rolls-Royce has agreed to sell its wholly-owned subsidiary L'Orange, a parts maker, to US-based Woodward for an enterprise value of €700m (£610m).
Woodward, which his based in Colorado, is a manufacturer and service provider of control system solutions and components for the aerospace and industrial markets. L'Orange will be renamed Woodward L'Orange and will be integrated into Woodward's industrial segment.

L'Orange supplies fuel injection technology for engines that power a wide range of industrial applications including marine power and propulsion systems, special-application vehicles, oil and gas processing, and power generation.

In 2017, Stuttgart-based L'Orange reported pro forma sales of €244m, underlying earnings before interest, tax, depreciation and amortisation of €74 million, underlying operating profit of €64m and post-tax free cash flow of €51m.

Rolls-Royce chief executive Warren East said: “This transaction builds on the actions we have taken over the last two years to simplify our business. The divestiture of L'Orange enables Rolls-Royce Power Systems to focus on other long-term, high growth opportunities and our company to allocate our capital to core technologies and businesses that drive greater returns for the group.”

Andreas Schell, president and CEO of Rolls-Royce Power Systems, added: “Rolls-Royce Power Systems will remain a key customer of Woodward L'Orange. We have enjoyed working with L'Orange who have a leading position in their markets, excellent technology, a skilled workforce and strong leadership. We wish them well as they join the Woodward organisation.”

The transaction, which has been approved by the boards of directors of both companies, is expected to close by the end of the second quarter of calendar 2018, subject to clearance from the German antitrust authorities.

Rolls-Royce said proceeds from the sale will be used to improve the resilience of the balance sheet and provide additional capital “to judiciously pursue opportunities that will drive greater returns for the group”.