Siemens has received approval from the European Commission for its proposed acquisition of Rolls-Royce’s aero-derivative gas turbine and compressor business, as well as Rolls-Royce’s 50% stake in the Rolls Wood Group (RWG) joint venture providing maintenance, repair and overhaul services.
Rolls-Royce agreed in May to sell the businesses to Siemens for a £785 million cash consideration.
The Commission’s investigation focused on the supply of small and medium sized gas turbines and compressor sets and confirmed that the proposed transaction does not raise competition concerns. It found that in the field of gas turbines customers do not view Siemens and Rolls-Royce as close competitors because of the technological differences between their products. Moreover, a number of strong competitors that are able to effectively compete with the merged entity will remain on the market.
The EC also investigated concerns that after the merger Siemens could stop supplying certain Rolls-Royce’s ADGT to compressor manufacturers and prevent them from competing with the merged entity for certain offshore oil and gas projects. However, the investigation found that customers of oil & gas compressor sets typically view the compressor as the most customised component, while the gas turbine is seen as a more standardised product.
Completion of the deal is expected before the end of 2014.
