Rolls-Royce has agreed to sell its Spanish ITP Aero business for 1.7 billion euros (£1.5 billion) to a consortium led by private equity giant Bain in the latest move of its major disposal programme.
The FTSE 100 engineering giant said the deal, which is expected to complete in the first half of 2022, will be used to strengthen the firm’s balance sheet.
Shares in Rolls-Royce leapt by more than 10% immediately after the announcement.
The consortium acquiring the Basque region-headquartered manufacturer of aircraft engines and turbines ITP Aero also includes Sapa and JB Capital.
Warren East, chief executive of Rolls-Royce, called the sale a “significant milestone” in its plan to raise £2 billion through disposals in order to boost its credit position.
Mr East said: “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.”
ITP Aero reported revenues of 735 million euros (£628 million) in 2020 and earnings before interest and taxes of 40 million euros (£34 million).
Carlos Alzola, chief executive of ITP Aero, said: “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.”
Shares in the company were 9.4% higher at 145p.