Rolls-Royce completes sale of lower power range engine business to DEUTZ

On 1 August 2024, Rolls-Royce has completed the sale of the lower power range engines business of Rolls-Royce Power Systems AG to DEUTZ AG. The sale follows the announcement on 13 December 2023 of an agreement in principle being reached and the sale price is in the high double-digit million euro range. 

Dr. Joerg Stratmann, CEO of Rolls-Royce Power Systems said: “This deal follows the realignment of our strategy to focus on the supply and maintenance of engines and systems primarily from our own production. We are handing over a good business, an excellent customer base and a strong team.”

As a result of the transaction, Deutz will take over the distribution of the mtu Classic series in the lower power range and the mtu engine series 1000 to 1500, which are based on three Daimler Truck engine platforms. These engines are in the 5 to 16 litre displacement class with an output of up to 480 kW and used in a variety of off-highway applications, primarily agriculture and construction.

Power Systems will continue to use engines based on Daimler Truck technology to power railway and military land vehicles, as well as for power generation. The servicing activity related to engines already in use is also part of the sale and, following a transition phase, is expected to be covered exclusively by Deutz-authorised partners from 1 January 2025.

The takeover follows close on the heels of DEUTZ’s alliance with Daimler Truck to develop and market medium- and heavy-duty engines (MDEG and HDEP platforms) in the off-highway segment. The alliance was entered into by the two companies in 2023 and is slated to begin in 2028. The agreement for DEUTZ to take over Rolls-Royce’s sales and service activities means that, with immediate effect, DEUTZ will be marketing the off-highway variants of these engines four years earlier than provided for under the existing alliance with Daimler Truck and will also distribute the older mtu Classic model series (Daimler Truck OM900 and OM460 engine series).  

“By accessing the engine platforms at this significantly earlier stage, we can offer our existing and prospective customers a much better concept for the transition. This will give them greater planning certainty, and we will benefit from more rapid access to the market,” explains DEUTZ CTO and CSO, Dr. Ing. Markus Müller.

As a result of the transaction, DEUTZ expects additional annual revenue of around 300 million EUR and an EBIT margin that is above the Group’s current margin. The purchase price for the engine portfolio is in the upper-double-digit millions of euros. DEUTZ’s takeover of the sales and service activities will also see more than 50 employees move from the Rolls-Royce division to DEUTZ.

Under its Dual+ strategy, DEUTZ is focusing on optimized internal combustion engines, green technologies that meet the needs of the market, such as hydrogen internal combustion engines, and the global expansion of the service business.