Transmashholding International gets rolling in 2021 with €150m acquisition of Bergen Engines from Rolls Royce

Bergen Engines, a Norway based manufacturer of medium-speed gas and diesel engines and part of Rolls Royce Power systems is to be sold to Transmashholding International, a rail stock and locomotive manufacturer for the cost of €150 million. The deal has been approved by the boards of both Rolls Royce and Transmashholding, and is expected to close in the second half of 2021. The sale is part of Rolls Royce’s ongoing series of asset sales that is hoping to raise a total of €2 billion for the company.

Pandemic cash crunch drives asset sales

Rolls Royce has been heavily hurt by travel disruptions caused by Covid-19. As the aero-engine builder is paid by the number of hours flown on its engines, the pandemic has seen its revenue plummet as planes remain grounded across the world. With hopes of a quick recovery for the airline industry looking increasingly unrealistic, Rolls Royce has undertaken an asset sale program aimed at raising money and making the company a ‘simpler, more focused group,’ according to CEO Warren East.

Will TMH take to the sea, or will Bergen Engines ride the rails?

TMH International, based in Switzerland, is a subsidiary of the privately-owned Russian Transmashholding Group (chaired by Andrey Bokarev and founded by Iskander Makhmudov in 2002), the largest rolling stock manufacturer in Europe and the 4th largest in the world. The core business of the company has been Diesel and Electric locomotives.

Conversely, Bergen Engines is a Norway-based manufacturer that has supplied over 7,000 marine engines and power generators for offshore oil and gas vessels, tankers, ferries, cruise ships and fishing trawlers. To date, the company has never made inroads into rail stock or locomotive engines.

Carbon neutral future of Bergen Engines and Transmashholding

Kirill Lipa, CEO of Transmashholding, said that “Together with Bergen Engines, TMH intends to develop a long-term strategy based on carbon-neutral applications (…). This is the clear technological direction for the future of combustion engines, with significant demand not only in Russia but also worldwide.” Jon Erik Røv, Managing Director of Bergen Engines has also stated that “We are currently at the start of an exciting era in the development of carbon-neutral power solutions.”

Currently, everyone from the Chinese Government to US e-commerce giant Amazon is looking at more carbon-neutral power generation options for transportation links, so the direction certainly offers potential for both companies. In Scotland and Germany, the possibility of hydrogen-powered rail transport is already being explored, and rail appears to be making a comeback in logistics as a more carbon-friendly option. Given Transmashholding’s experience in locomotives, the acquisition could see them planning to be a major player in carbon-neutral rail transport. Alternatively, as a Norwegian marine engine manufacturer, Bergen Engines would be well-positioned to target shipping companies. Scandinavian Stena Lines have stated their aim to put zero-carbon ferries into operation by 2030. Perhaps with this acquisition, Transmashholding plans to expand into other transportation industries.

What the two companies’ carbon-neutral future will look like remains to be seen, but Transmashholding International and Bergen Engines certainly have the potential to be big players in the coming years.

There are no comments

Add yours