JULY 18, 2014 — Wärtsilä and China State Shipbuilding Corporation (CSSC) have signed an agreement to establish a joint venture that will take over Wärtsilä's two-stroke engine business.
Through the agreement, government-owned CSSC will own 70% of the business through its affiliate CSSC Investment and Development Co. Ltd, while Wärtsilä will hold a 30% ownership position.
The joint venture will be domiciled in Switzerland, and the head office will remain at the present two-stroke engine headquarters in Winterthur. The current two-stroke engine business management team will remain in place.
The joint venture will assume ownership of Wärtsilä's two-stroke engine technology, and will continue to develop and promote sales of the engine portfolio with the full support of both partners.
Wärtsilä says the parties will cooperate in two-stroke engine technology, marketing, sales, and service activities. The parties have agreed to transfer CSSC's whole position as shareholder to a joint venture established by an entity connected with the Municipal Government of Shanghai and CSSC.
Responsibility for servicing Wärtsilä's two-stroke engines will remain with Wärtsilä Services through its global network.
The value of the transaction is approximately EUR 46 million. The financial impact of the deal will be dependent on the timing of the closing and certain related mechanisms.
Wärtsilä says the deal will have a positive effect on its continuing operations. The closing of the transaction is subject to the required regulatory approvals, which are expected during the first quarter of 2015.
The objective of the partnership is to combine the strengths of the two partners, both of whom are major players in the global marine sector. The participation of CSSC, the largest shipbuilding conglomerate in China, will accelerate the company's growth in important Asian markets, while retaining its position as an international supplier to the global shipping industry. The partnership will enhance the position of Wärtsilä's two-stroke technology in the marine engine market, and will provide a strong base for future investments in leading two-stroke technology and customer support.
"We have enjoyed good co-operation with CSSC for many years, and we are convinced that by joining forces we can better serve the needs of our global customers. CSSC shares our vision for the future of the two-stroke marine engine market, and we feel that this agreement will benefit both parties as well as the entire shipping sector. By enhancing the sales volume of Wärtsilä's two-stroke engines, product development can be accelerated and critical new engine solutions can be brought to the market much faster than earlier," says Jaakko Eskola, Senior Executive Vice President, Ship Power, Wärtsilä Corporation.
"We are very pleased that this agreement has been made and we look forward to working closely with Wärtsilä in this joint venture project. Wärtsilä is a company that we admire as a technology leader, and as a supplier that has provided economic and environmental benefits to ship owners and operators through its high quality products," says Wu Qiang, Vice President, CSSC.