OREANDA-NEWS. Daimler AG is to sell its 50-percent equity interest in the joint venture Rolls-Royce Power Systems Holding Ltd. (RRPSH) to its partner Rolls-Royce plc. Daimler is making use of a put option on its stake in RRPSH that was agreed upon with Rolls-Royce in 2011. The Board of Management of Daimler AG has passed the required resolutions. In the course of the transaction, Daimler expects a significant cash inflow. According to the procedure agreed upon with Rolls-Royce the financial terms of the transaction will be finally determined in the upcoming months.

Rolls-Royce is the best conceivable owner for Rolls-Royce Power Systems AG (RRPS). The acquisition of Daimler’s shares will allow Rolls-Royce to strengthen RRPS by contributing more of its own activities and technologies. On the basis of long-term supply agreements, Daimler will continue to be an important supplier of heavy-duty and medium-duty diesel engines to RRPS going forward. Furthermore, Daimler plans to further expand its business with engines and drive systems for professional applications apart from buses and trucks (“off-highway”).

The transaction is subject to the merger control approvals and foreign-trade law approvals.

Daimler and Rolls-Royce acquired RRPS via a 50:50 joint venture in 2011. The company, based in Friedrichshafen on Lake Constance, was operating at that time under the name Tognum AG. Rolls-Royce took over the industrial management of RRPS and has since then consolidated the company. In the past three years, RRPS has developed positively under the industrial management of Rolls-Royce.

Since the beginning of the cooperation, Rolls-Royce and Daimler engaged in an ongoing and close dialog on the best possible industrial development of RRPS. For this purpose, it was concluded that the complete acquisition of the joint-venture company by Rolls-Royce would create optimal prerequisites. The supply relationships until 2025 agreed upon between Daimler and RRPS are unaffected by the sale of the shareholding. This means that there will be no impact at Daimler on its manufacture of products for RRPS. Each year, Daimler supplies RRPS with an average of about 18,000 heavy-duty and medium-duty diesel engines, i.e. engines in the so-called low-power range (LPR). In view of the successful development of RRPS in the past years and the long-term supply agreements, this partnership no longer needs to be backed by an equity participation.