Rolls-Royce reaches agreement-in-principle with Deutz AG to take over the lower-power-range engines business

Rolls-Royce and Deutz AG are in positive discussions for the sale of the off-highway engines business in the lower power range up to 480 kW to Deutz AG for a price in the high double-digit million Euros.

This relates to diesel engines and engine systems using Daimler technology which are developed and manufactured by Daimler Truck AG for Rolls-Royce Power Systems to its specifications and used mainly in agricultural vehicles and construction machinery, not in rolling stock or in military vehicles.

Rolls-Royce recently presented its strategy to become a high performing, competitive, resilient and growing business to investors. In the Power Systems division the focus will be on the strategic growth areas of power generation, governmental, marine, service and the future field of battery energy storage systems.

Tufan Erginbilgic, CEO, Rolls-Royce plc, said: “This is a clear illustration of our strategy in action. Becoming more focused on the markets where we know Rolls-Royce can win. Power Systems is an integral part of our organisation with a strong brand and real advantage in power generation, governmental and marine end-markets, where we see the strongest demand and an opportunity for better returns from our power-dense and reliable solutions.”

Dr. Jörg Stratmann, CEO of Rolls-Royce's Power Systems, said: “As we evolve our strategy, we are also constantly analysing our product portfolio. As a result, we will be concentrating largely on higher-powered systems in the off-highway engine sector, primarily from our in-house production. We have therefore decided to transfer our successful lower-power-range engines business, which uses Daimler technology, to a partner.”

Until the transfer of the business is complete, Rolls-Royce's Power Systems division will continue its activities in this business segment unchanged in such a way that customer relationships, delivery and service obligations remain unaffected. Following a final agreement, the closing – subject to regulatory approvals – is expected from mid-2024.

Rolls-Royce Power Systems currently has exclusive rights to the global distribution of off-highway engines using Daimler technology (MDEG, HDEP and Classic engine platforms), with the original contract term set to expire in April 2028.

The products under negotiation are the Series 1000, 1100, 1300 and 1500 engines and the Classic Series OM900 and OM460 in the 75 to 480 kW power range, albeit specifically not those used in rail or military vehicle applications. The total number of people employed in this part of the business is in double-digit figures.

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