Rolls-Royce (RYCEY) has inked a deal to sell ITP Aero for €1.7 billion to Bain Capital Private Equity. The divestment is part of the company’s disposal program that seeks to rebuild the balance sheet and support medium-term ambitions. RYCEY shares rose 10.67% to close at $1.97 on Monday.
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Rolls-Royce is an Industrial technology company that develops, manufactures and sells aero engines for commercial aircraft. It also provides high speed and medium speed reciprocating engines.
The deal values ITP Aero at an enterprise value of approximately €1.8 billion. Subject to certain closing conditions, the transaction is expected to conclude in the first half of 2022. (See Rolls-Royce stock charts on TipRanks)
In August, 2020, Rolls-Royce announced to raise at least £2 billion as part of the disposal program. The program is in line with its strategy to reduce capital intensity and increase focus on long-term strategic supply relationships.
The CEO of Rolls-Royce, Warren East, stated, “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.”
For the year ended December 31, 2020, ITP Aero generated €735 million in revenues with an underlying EBIT of €40 million.
Recently Redburn Partners analyst Jeremy Bragg upgraded Rolls Royce to Buy from Hold. The analyst sees some upside potential on the stock as wide body flight hours recover.
Consensus among analysts is a Moderate Buy based on 1 Buy.
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