The Norwegian Government says the planned sale of Bergen Engines by Rolls-Royce to Russian TMH threatens national security interests and moves to stop the sale. The sale was announced by Rolls-Royce on 4 February and is part of the company’s restructuring.
TMH Group would pay approximately EUR 150 million for the company. The sale would include the medium speed engine factory, service workshop and foundry in Norway, engine and power plant design capability, and a global service network spanning more than seven countries. Bergen Engines’ long-term relationship with Kongsberg Maritime, distributor of Bergen medium speed engines to the maritime market, was planned to continue as is.
However, now the Minister of Justice and Emergency Management Monica Mæland says in a statement that the Government has sufficient information to conclude that it is necessary to prevent the company from being sold to a company that is controlled from a country with which Norway does not have security cooperation.
Military strategic significance
According to the Government’s assessments, the technology Bergen Engines possesses and the engines they produce would have had great military strategic significance for Russia and would have strengthened Russia’s military capabilities in a way that would clearly be contrary to Norwegian and allied security policy interests.
Although the products and technologies are not covered by the export control lists, Russia has had significant challenges in accessing them since the Western sanctions against the country were introduced in 2014. According to Norway, the planned acquisition could lead to attempts to circumvent the export control regulations or Norway’s restrictive measures against Russia to gain access to knowledge and technology of great military strategic importance.
Overall, the government says it believes that national security interests could be threatened if the ownership of Bergen Engines is transferred from Rolls-Royce to TMH. A proposal will therefore be submitted for a decision to stop the sale pursuant to the Security Act § 2-5 for the King in Council on Friday, 26 March 2021, says Mæland.
Uncertainty for Bergen Engines
Rolls-Royce stresses the announcement will cause significant uncertainty in Bergen Engines, which employs more than 900 people worldwide including 650 in the main factory in Hordvikneset.
The company stresses it ‘followed the appropriate process in contacting the authorities in advance of the announcement of the sale on 4 February 2021’ and that it has ‘cooperated with the government’s subsequent review by pausing the sales process’. Rolls-Royce says it ‘believed [it] had identified a new owner willing to invest in the business and its people for the long-term’ and now awaits formal legal notification by the Norwegian Government.
Rolls-Royce wants to sell Bergen as the manufacture of medium-speed gas and diesel engines is not core to its long-term strategy and does not intend to retain the business.
In a concluding statement, Rolls-Royce says it ‘will be seeking the assistance of the Norwegian Government to swiftly find another option, which can provide Bergen Engines and its people with the investment required for the future and Rolls-Royce with an appropriate outcome.’
Picture: Assembly line at the Bergen Engines plant (by Rolls-Royce).