Rolls-Royce Holdings (LON:RR.) has agreed to sell its commercial marine business to Norwegian tech firm Kongsberg for £500mln as part of a plan to simplify the group.
Kongsberg, which is 50% owned by the Norwegian government, will launch a rights issue of 5bn kroner to help finance the deal.
READ: Rolls-Royce considers sale of commercial marine business
Rolls-Royce said the decision to dispose of the unit follows a strategic review as it trims down the business from five divisions into three – civil aerospace, defence and power.
The company, which is currently split into civil aerospace, defence aerospace, power systems, nuclear and marine divisions, said the sale will include propulsion, deck machinery, automation and control.
It expects net proceeds of £350mln to £400mln from the sale.
The marine business designs ships for offshore, cargo, passenger and fishing vessel customers across 30 countries.
Rolls-Royce has been evaluating options for the business since January and was widely expected to announce a disposal. The group has already closed sites and cut thousands of jobs at the unit, which has experience weaker demand from the offshore oil industry.
For Kongsberg, the deal will see it expand into technology for ships. The firm expects to complete the rights issue in the fourth quarter of this year.
Kongsberg delivers technology systems to clients in the oil and gas industry, merchant marine, defence and aerospace sectors.
The deal is expected to conclude early next year.