Rolls-Royce Announces Long-Awaited Sale of ITP Aero for EUR 1.70 Billion

Narrow-moat Rolls-Royce reached an agreement to sell 100% of its stake in ITP Aero to a consortium led by Bain Capital for total proceeds of EUR 1.70 billion (GBP 1.45 billion) equating to a total enterprise value of EUR 1.80 billion. The share price reacted positively to the news, trading 10% higher intraday, and while the proceeds from the sale are in line with our GBP 1.50 billion estimate, we view this as positive news from a capital restructuring and investor sentiment perspective. We will make no changes to our GBX 110 (ADR: $1.53) fair value estimate as the sale proceeds are already factored into our forecasts. We continue to prefer wide-moat peer Safran, which offers a more attractive risk/return profile.