Rolls-Royce has agreed to sell its loss-making commercial marine business to Norwegian firm Kongsberg for an enterprise value of £500 million.
The Derby manufacturer said the net proceeds will be around £350 million to £400 million after taking pension liabilities and other costs into account.
The announcement comes as Rolls-Royce enacts a sweeping restructuring plan aimed at saving £400 million per year.
The transaction has been approved by the boards of both companies and is expected to close in the first quarter of 2019, subject to clearance from the regulatory authorities.
“This transaction builds on the actions we have taken over the last two years to simplify our business,” said chief executive Warren East.
“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 commercial marine arm has approximately 3,600 employees, most of which are based in the Nordic region.
Last year the division generated revenue of £817 million with an operating loss of £70 million.
The disposal of the marine business is expected to have a positive profit impact of around £50 million based on 2017 figures, Rolls-Royce said.
Commercial Marine president Mikael Makinen said: “Rolls-Royce has been responsible for leading many of those technological advancements, and, with the combination of great people, market-leading technology and a desire by Kongsberg to take this business to the next level, I am sure that this business will prosper in the years to come.
“We will now work closely with Kongsberg as we go through the transition in the months ahead.
“I would like to pay tribute to the 3,600 commercial marine employees who have maintained absolute focus on their day jobs, winning business and maintaining the levels of support our customers expect.”
Kongsberg provides products to sectors including defence, oil and gas and aerospace industries.
It has operations in 25 countries and around 7,000 staff worldwide.
In 2017 the OSE company had a turnover of approximately 14.5 billion Norwegian Krone (£1.36 billion).
Its chief executive, Geir Haoy, said: “The acquisition of Rolls-Royce Commercial Marine makes us a more complete supplier to the maritime industry.
“The maritime industry is becoming increasingly globalised and is undergoing considerable technological and market driven changes. With this acquisition we will strengthen our strategic position with shipowners, shipyards and other customers and partners.”