Bergen Engines sale to Russian company blocked

The controversial proposed sale of Rolls-Royce’s Bergen Engines business to a Russian company has been halted by the Norwegian government.

Rolls-Royce said the move will cause “significant uncertainty” at the Norway-based engine maker.

In February, Diesel Progress reported that Rolls-Royce had signed an agreement to sell its Bergen business to TMH International, the international branch of Russia’s TMH Group, for approximately EUR 150m.

The power range of Bergen Engines is 1,400 to 11,830 kWe.

The move was part of Rolls-Royce’s target of raising at least £2 billion from disposals and the Norwegian company was due to be operated as a stand-alone business by TMH International, which is headquartered in Switzerland and operates in Argentina, Cuba, Egypt, Germany, Hungary, Israel and South Africa.

It is understood that Norway assessed the security implications for the country’s navy.

There were thought to be concerns that the sale would provide the Russian Navy with sensitive technology information. Bergen is a supplier to NATO member Norway’s navy.

The sale would have included the medium speed engine factory, service workshop and foundry in Norway; engine and power plant design capability and a global service network spanning more than seven countries. Since 1946, Bergen Engines has supplied more than 7,000 engines to marine and power generation customers worldwide, of which around 4,000 are still in operation.

The power range of Bergen Engines is 1,400 to 11,830 kWe.

Bergen Engines has been a part of Rolls-Royce since 1999 and has approximately 950 employees, with the majority based in Bergen. In 2019 the business generated revenues of £239m.

In a statement today Rolls-Royce said: “We note the announcement by the Norwegian Government that the sale of Bergen Engines to TMH Group must be stopped. We followed the appropriate process in contacting the authorities in advance of the announcement of the sale on 4 February 2021.

“We have co-operated with the Government’s subsequent review by pausing the sales process and believed we had identified a new owner willing to invest in the business and its people for the long-term. We await formal legal notification by the Norwegian Government.

“Bergen Engines has a skilled workforce and significant future commercial opportunities, but the manufacture of medium-speed gas and diesel engines is not core to our long-term strategy and we do not intend to retain the business.

“Today’s announcement will cause significant uncertainty in Bergen Engines, which employs more than 900 people worldwide including 650 in the main factory in Hordvikneset. We will be seeking the assistance of the Norwegian Government to swiftly find another option, which can provide Bergen Engines and its people with the investment required for the future and Rolls-Royce with an appropriate outcome.

“We remain committed to our target, as set out originally on 27 August 2020, to raise at least £2bn from disposals by early 2022.”