Woodward Buys L’Orange

By Mike Osenga10 April 2018

Rolls-Royce and Woodward, Inc. jointly announced they have signed an agreement for Woodward to acquire L’Orange GmbH and its related operations in Germany, the United States and China.  The sale is for an enterprise value of €700 million (US$859 million). L’Orange is part of Rolls-Royce Power Systems business.

L’Orange is a supplier of fuel injection systems for industrial diesel, heavy fuel oil and dual-fuel engines with 2017 pro forma sales were €244 million.  L’Orange, which will be renamed Woodward L’Orange, will be integrated into Woodward’s Industrial segment.

Woodward said the acquisition establishes it as a technology and system provider of engine control systems to the industrial engine market and its the complementary portfolio allows for further expansion into key industrial segments. Woodward said L’Orange also brings a large installed base of industrial equipment delivering a consistent and profitable aftermarket.

L’Orange supplies fuel injection technology for engines in a range of industrial applications including marine power and propulsion systems, special-application vehicles, oil and gas processing, and power generation. L’Orange serves a number of the world’s specialist diesel engine manufacturers, including Rolls-Royce Power Systems’ subsidiaries, MTU Friedrichshafen and Bergen Engines, and other low to high speed engine builders.

The announcement of the acquisition said L’Orange will remain a supplier to MTU and Bergen in the future through long-term supply agreements, with an initial term of 15 years,.

Warren East, CEO of Rolls-Royce, said: “This transaction builds on the actions we have taken over the last two years to simplify our business. The divestiture of L’Orange enables Rolls-Royce Power Systems to focus on other long term, high growth opportunities and our company to allocate our capital to core technologies and businesses that drive greater returns for the group.”

Thomas A. Gendron, chairman and chief executive officer of Woodward, said: “L’Orange is an excellent strategic and financial fit for Woodward, and this transaction exemplifies our acquisition strategy to invest in markets with solid long-term fundamentals. The acquisition of L’Orange brings innovative technology, bolsters relationships with key customers and enhances the profitability of our Industrial segment.”

Rolls-Royce said in January 2018 that it was reviewing its strategic options for L’Orange. The sale to Woodward will enable the L’Orange business to pursue new market opportunities that will be opened up as a result of no longer being associated directly with one individual engine manufacturer. Together, Woodward and L’Orange will be able to expand their customer base, pursue further collaborations and explore new areas of opportunity.

The transaction has been approved by the boards of directors of both Rolls-Royce and Woodward, as well as the Supervisory Board of Rolls-Royce Power Systems. The transaction is expected to close by the end of the second quarter of calendar 2018, subject to clearance from the German antitrust authorities.

L’Orange is based in Stuttgart, Germany and has approximately 1000 employees based mostly in Germany, but also in the U.S. and China.

Headquartered in Fort Collins, Colo. US, Woodward reported 2017 sales of approximately US$2.1 billion and has approximately 7400 employees worldwide.

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