Siemens buys Rolls-Royce's gas turbine business

The German company has also signed a joint venture agreement with Mitsubishi Heavy Industries for the metals industry

Germany's Siemens is to acquire the Rolls-Royce Energy aero-derivative gas turbine and compressor business for £785 million.

Rolls-Royce's gas turbine and compressor business has an installed base of about 2,500 gas turbines. It employes around 2,400 people, delivered revenue of £871 million and earnings before interest and tax of £72 million in fiscal year 2013. The transaction is expected to close before the end of December 2014, subject to regulatory approvals.

In addition, as part of the transaction, Siemens will get exclusive access to future Rolls-Royce aero-turbine technology developments in the 4MW to 85MW power output range, as well as preferred access to supply and engineering services. Siemens will pay Rolls-Royce an additional £200 million for this 25-year long agreement.

Meanwhile, Siemens has formed a joint venture with Mitsubishi Heavy Industries for the metals industry. The venture will provide plants, products and services for the iron, steel and aluminum industry. The joint venture includes supply agreements for Siemens' Industry Automation and Drive Technologies divisions. It will start operations in January 2015 subject to approval. The company's headquarters will be located in the UK.

Siemens is also considering making a bid for French engineering company Alstom. It has been given four weeks to examine Alstom's finances before committing to a deal.