Strategic projects, acquisitions, joint ventures, and expansion of the network
In December, Wärtsilä announced the acquisition of L-3 Marine Systems International (L-3 MSI) from NYSE-listed L-3 Communications Holdings Inc. L-3 MSI delivers automation, navigation and electrical systems, as well as dynamic positioning technology, and sonar and underwater communications technology for the marine, naval and offshore markets. The transaction is valued at EUR 285 million (enterprise value), subject to customary adjustments including an estimated reduction of EUR 60 million for L-3 MSI employee pension-related liabilities to be assumed by Wärtsilä. Financing for the deal will be from existing cash resources and credit facilities. The acquisition is subject to clearance from the regulatory authorities and is expected to be closed during the second quarter of 2015.
Wärtsilä Yuchai Engine Co. Ltd., the 50/50 joint venture between Wärtsilä and Yuchai Marine Power Co., Ltd, inaugurated its new factory in Zhuhai, China in September. The new factory site covers a total area of 266,700 square meters. The factory will be used for the assembly and testing of Wärtsilä 20, Wärtsilä 26 and Wärtsilä 32 medium-speed engines. The plant is expected to be in full production before the end of 2016. The inauguration ceremony for Wärtsilä’s new fully-owned manufacturing facility in Brazil is expected to take place in the first quarter of 2015.
The set-up of a joint venture between Wärtsilä and China State Shipbuilding Corporation (CSSC) for the manufacturing of medium and large bore medium-speed diesel and dual-fuel engines, announced in July, is proceeding according to plan. Wärtsilä’s share of the joint venture will be 49% and the size of Wärtsilä's equity investment is approximately EUR 12 million. The CSSC Wärtsilä Engine (Shanghai) Co. Ltd factory will be located in Lingang, Shanghai and is expected to have its first engine ready for delivery during the first half of 2016. The joint venture will target the growing offshore and LNG markets, as well as the auxiliary engine market for very large container vessels.
The divestment of Wärtsilä’s 50% share in the joint venture Wärtsilä TMH Diesel Engine Company LLC to Transmashholding, the other joint venture party, was completed in July. The joint venture was established for the manufacture of modern and multipurpose diesel engines to be used in shunter locomotives, as well as in various marine and power applications. The value of the agreement was approximately EUR 12 million and the transaction did not have a significant impact on Wärtsilä’s operating result.
In January 2014, Wärtsilä confirmed the approach by Rolls-Royce with a preliminary proposal for a possible offer and that there were no longer ongoing discussions with Rolls-Royce.