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Siemens snags Rolls-Royce energy business

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Siemens has purchased the energy gas turbine and compressor business unit belonging to Rolls-Royce in order to boost the firm's energy division.

The tech giant will pay £785 million ($1.32 billion) for the unit, which builds small electricity-generating turbines, adding to the larger turbines Siemens already manufactures. In a 25-year licensing agreement, Rolls-Royce will also receive roughly £200 million from Siemens in additional funds.

Last month, Rolls-Royce revealed it was discussing a possible sale of the unit, which accounts for 2,400 staff. The unit's customers include players in the oil, gas and electricity generation industries.

Siemen's energy business generated sales of 27 billion euros last year, and accounts for over 80,000 employees.

By purchasing the Rolls-Royce unit, Siemens adds yet more staff and resources to its expanding energy business, potentially positioning the company as a future rival to companies including General Electric.

Since the election of Joe Kaeser as CEO in August, the German firm's operations have been streamlined with a focus on the energy business. Starting in October, Siemens will restructure itself in to nine divisions in order to reduce costs, improve efficiency and centralize the firm's functions.

Rolls-Royce CEO John Rishton commented:

"This agreement will give the energy business greater opportunities as part of a much larger energy company and allows Rolls-Royce to concentrate on the areas of business where we can add most value."

Read on: Wall Street Journal

Image credit: Flickr

— By on May 7, 2014, 4:55 AM PST

Charlie Osborne

Contributing Editor

Charlie Osborne is a freelance journalist and photographer based in London. In addition to SmartPlanet, she also writes for business technology website ZDNet and consumer technology site CNET. She holds a degree in medical anthropology from the University of Kent. Follow her on Twitter. Disclosure