Rolls-Royce has signed a definitive agreement to sell 100% of ITP Aero to Bain Capital Private Equity, a consortium of investors, for approximately 1.7 billion euros.

ITP Aero manufactures a variety of components for Trent engines used on a number of Airbus and Boeing aircraft.

The proposed sale is a key element of Rolls-Royce's disposal programme, announced in August last year, to raise proceeds of at least £2 billion and is consistent with the company's strategy of reducing capital intensity while maintaining a key long-term strategic supply relationship. It will receive total cash proceeds, excluding any cash retained by Rolls-Royce, which will be used to help rebuild its balance sheet.

The transaction has been approved by the Board of Rolls-Royce and the consortium members and is subject to certain closing conditions, including customary regulatory clearances. It is expected to close in the first half of 2022.

The consortium's vision for an independent ITP is to invest in growing the company's products, regions and customers. ITP's partnership with Bain Capital and the consortium will allow it to further drive its strategy to be a pioneer of new technologies and world class manufacturing enabled by a highly skilled workforce.

The consortium led by Bain Capital supports the maintenance of jobs as well as ITP's future growth. Bain Capital is also open to negotiate the incorporation of further Spanish and Basque industrial partners in the consortium, representing up to 30% of the equity, until the end of June 2022.

“Today's announcement is a significant milestone for our disposal programme as we work to strengthen our balance sheet, in support of our medium-term ambition to return to an investment grade credit profile.” Warren East, CEO, Rolls-Royce, says. “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 is also vital to Rolls-Royce. The company will remain a key strategic supplier and partner for decades to come.”

At the end of 2020, ITP Aero reported revenues of 735 million euros and underlying EBIT of 40 million euros. Rolls-Royce's former site at Hucknall, UK, was integrated into the ITP business with a structured plan to include the associated fabrications commodity supply chain in the short term.