Daimler sells stake in power systems joint-venture to Rolls Royce

10th Mar 2014 14:20

After the close of trading last Friday, Daimler AG announced its intention to make use of its 'put' option, granted in 2011, to sell its 50 per cent equity stake in Rolls-Royce Power Systems (RRPS) to Rolls Royce.As a result of the transaction, Daimler expects to see "a significant cash inflow", although the financial terms will be finally determined in the upcoming months, the company announced.The option, which is subject to a formal valuation process, was valued at £1.9bn on the Rolls-Royce balance sheet as of Dec 31st 2013. "Rolls Royce has ample liquidity to fund this purchase from existing cash and borrowing facilities," the firm said in a statement issued in parallel to Daimler´s.Nonetheless, and per its long-term agreements with the British outfit, Daimler said it will continue to be an important supplier of heavy-duty and medium-duty diesel engines to RRPS.The proceeds will be deployed to strengthen the German group´s core business. However, Daimler also indicated that its intention is to continue to further "drive the business for heavy-duty and medium-duty diesel engines", in close coordination with Rolls Royce. The transaction is subject to the merger control approvals and foreign-trade law approvals.As of 14:19 shares of Rolls Royce were advancing 1.95% to 1,046p.AB