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Proceeds of £350m to £400m expected from divestment of loss-making unit


Gain to date: 18.8%

Original entry point: Buy at 836.6p, 10 May 2018

Rolls-Royce (RR.) has sealed the deal on the anticipated sale of its commercial marine business.

The operation, which includes deck machinery, automation, controls alongside propulsion on more than 1,000 vessels to date, has been sold to Kongsberg, a Norwegian technology engineering business, at a £500m enterprise value.

That will equate to approximately £350m to £400m of proceeds to Rolls after various pension costs and fees have been accounted for. This looks decent business considering the underlying £25m operating loss chalked-up by the unit in 2017 despite sales worth more than £1bn.

This is further evidence of chief executive Warren East putting his restructuring plans into action. More importantly for investors, that action is increasingly being supported by the market’s reaction and the direction of the share price.

The stock is around 8% higher than when Shares last updated on 21 June, and has climbed close on 20% since our original article.


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