Rolls-Royce & Madrid in "constructive talks" over ITP Aero sale

UK aerospace and engineering company Rolls-Royce has said it is holding "constructive" talks with the government in Spain over the sale of its Spanish business ITP Aero, the ninth-largest aeronautic engine company in the world, following reports that the deal may be blocked. 

Rolls-Royce is looking to make as much as €1.5 billion from the sale of turbine-blade maker ITP Aero, which is part of a wider divestment strategy in which it shedding €2.3 billion in assets to help its post-pandemic balance sheet.

Also read: Rolls-Royce suffers £4bn loss for 2020

On Friday, citing a person familiar with the matter, Bloomberg reported that the sale may be blocked by Madrid unless the buyer could offer reassurances about the company's future.

ITP Aero is headquartered in Spain's Basque region in the country's north and both the autonomous Basque government in Vitoria-Gasteiz and the central government in Madrid are involved in the talks that Rolls-Royce has described as "positive".

"The Spanish and Basque governments are important stakeholders and there is an ongoing and constructive dialogue with them," a Rolls-Royce spokesman told Reuters.

The UK company said that multiple parties had expressed interest in the sale and added that ITP would continue being a supplier to Rolls-Royce for decades to come.

"As a result, it is obviously very important to us that a new owner is able to continue to invest in ITP Aero's technology, innovation and workforce," the spokesman said.

Also read: Norway blocks Rolls-Royce subsidiary sale on national security grounds

In March, Rolls-Royce divestment plan suffered a setback in Norway when the sale of its maritime engines maker, Bergen Engines, to Russia's TMH Group was blocked by the government on grounds of national security.

Shares in Rolls-Royce were down 1.7% at £1.01 at 1356 GMT.

In its report, Bloomberg said that Madrid was concerned that Rolls-Royce could sell ITP Aero to a private equity fund, naming Bain Capital, KKR, and TowerBrook Capital as having expressed interest, and that such buyers would not have an industrial plan for the business.

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