Mubasher: Rolls-Royce on Friday announced the sale of its troubled commercial marine division to Norway’s Kongsberg Automotive for GBP 500 million ($661.4 million), as the company plans to simplify its operations.

The net proceeds are projected to range between GBP 350 million and GBP 400 million, after taking pension liabilities and other costs in account, the UK aircraft-engine manufacturer said, adding that they will be employed to improve its balance sheet and provide additional capital for boosting returns.

Moreover, the commercial marine division, which has about 3,600 employees, mostly based in the Nordic region, is set to have a positive profit impact of nearly GBP 50 million according to the company figures of 2017.

Kongsberg, in which the Norwegian government owns 50%, will finance the deal with 5 billion Norwegian krone (NOK) ($619 million) through issuing rights and a new bond loan. The rights issue, which is set to take place in the fourth quarter of the current year, is subject to parliamentary approval.

The deal came following a strategic review of the UK aircraft-engine manufacturer’s commercial marine business in January.

"The sale of our commercial marine business will enable us to focus on our three core businesses and on meeting the vital power needs of our customers," Rolls-Royce’s CEO Warren East said.

The announcement was made at the time the UK company aims to save GBP 400 million per annum through a far-reaching restructuring plan.

The transaction was approved by the boards of both companies, while a final deal is expected in the first quarter of 2019, subject to regulatory approval.