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With its acquisition of Allison, Rolls-Royce will be able to offer a family of engines that ranges from the ubiquitous Allison 250 (which powers thousands of light helicopters, including the JetRanger) through to the Trent 800, developed for the Boeing 777. (Rolls-Royce)
Analysis-Rolls Buys Allison
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Rolls Buys Allison
Rolls-Royce cemented its position as one of the big three in the aeroengine business in November when it agreed to buy the Allison Engine Company. On a debt free basis and subject to US regulatory approval, Rolls will pay $525 million to the management team that bought the old General Motors subsidiary in 1993. Financial markets reacted positively to the deal, which also gives Rolls-Royce a manufacturing base in North America and adds a perfectly complementary engine lineup, with no overlaps, to its product range.
Rolls makes jets with thrust ratings upwards of 15,600lb (70kN) but virtually no turboshafts, while Allison offers one jet below that rating and fields a huge range of propeller engines, including some of the industry’s most advanced. Allison, which will retain its name and corporate identity, is the dominant player in small turboshafts for light aircraft and helicopters. Rolls’s share price jumped when the purchase was announced and Moody’s Investors Services, the international ratings agency, immediately reaffirmed the British company’s credit rating, endorsing the move as safe. Financially the deal is not very risky because Rolls-Royce plans to pay for Allison with shareholders’ funds raised by selling more shares. It will not borrow the money from banks.
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