Wärtsilä to divest its shares in QMD 2-stroke JV
Wärtsilä plans to divest its shares in the Qingdao Qiyao Wärtsilä MHI Linshan Marine Diesel Co. Ltd (QMD), the joint venture company established for manufacturing large low-speed marine diesel engines. Wärtsilä's shares in the joint venture will be transferred to the current majority shareholder, Qingdao Qiyao Linshan Power Development Co Ltd, a company fully owned by China Shipbuilding Industry Corporation. The agreement was signed today in Beijing, China, the Finnish Corp. said Thursday in a press release.
The value of the transaction is not significant. The deal will have a positive effect on Wärtsilä's continuing operations but the impact is not significant. The closing of the transaction is subject to the required regulatory approvals.
The divestment comes as a result of the announcement made on July 18th 2014 regarding Wärtsilä and China State Shipbuilding Corporation (CSSC) joining forces to establish a new joint venture, which will take over Wärtsilä's 2-stroke engine business. Through this agreement, CSSC will own 70 per cent of the business through its affiliate CSSC Investment and Development Co. Ltd, while Wärtsilä will hold a 30 per cent ownership position. The parties will co-operate in 2-stroke engine technology, marketing, sales, and service activities. In this new context, the 2-stroke business currently owned by Wärtsilä will focus on its core activities, including technology development, licensing, product management as well as sales and marketing of 2-stroke engines. Manufacturing will be delegated entirely to licensees.
"The move to divest manufacturing assets will free up resources and increase our emphasis on accelerating the development of new engines and advanced technologies. In particular, Wärtsilä's unique low-pressure dual-fuel two-stroke engine development, the further expansion of the environmentally friendly Generation X -engines, as well as emission reduction technologies will benefit from this increased focus," says Martin Wernli, Vice President, Wärtsilä Ship Power, 2-stroke and Managing Director, Wärtsilä Switzerland Ltd.
QMD will continue to manufacture Wärtsilä low-speed marine engines under license from Wärtsilä via the new joint venture with CSSC. The currently valid license agreement will not be affected by the transaction.
QMD was established by China Shipbuilding Industry Corporation (CSIC), Wärtsilä Corporation, and Mitsubishi Heavy Industries Ltd (MHI) in 2006. The joint-venture agreement was signed by Qingdao Qiyao Linshan Power Development Co Ltd (QQLPDC) and Panda Shinco Holding BV (PSH). At that time, QQLPDC was jointly owned by Yichang Marine Diesel Plant (YMD) and Shanghai Marine Diesel Engine Research Institute (SMDERI), both being underlying units of CSIC. PSH is jointly owned by Wärtsilä and MHI. QMD was dedicated to the research and development testing, prototype manufacturing, production, and sales of large low-speed two-stroke marine diesel engines.
Wärtsilä is a global leader in complete lifecycle power solutions for the marine and energy markets. By emphasising technological innovation and total efficiency, Wärtsilä maximises the environmental and economic performance of the vessels and power plants of its customers. In 2013, Wärtsilä's net sales totalled EUR 4.7 billion with approximately 18,700 employees. The company has operations in nearly 200 locations in 70 countries around the world. Wärtsilä is listed on the NASDAQ OMX Helsinki, Finland.