Deutz To Take Over Sales and Service Operations for Selected Off-Highway Engines from Rolls-Royce Power Systems
German engine manufacturer Deutz has reached an agreement with Rolls Royce’s Power Business Unit on the takeover of sales and service operations for various industrial engines in the 5-to-16-liter range with a maximum power output of up to 480kW. Subject to final agreement, Deutz is taking over the distribution of the mtu Classic Series and the mtu engine series 1000-1500, which are based on three Daimler Truck engine platforms. The engines are used in various off-highway applications, primarily construction equipment and agricultural machinery. Deutz will also be taking over the service operations for engines that are already in service.
Earlier this year, Deutz entered into a cooperation with Daimler Truck to develop and market medium- and heavy-duty engines in the off-highway segment, scheduled to begin in 2028. With the agreed takeover of the sales and service operations from Rolls Royce Power Systems, Deutz is now taking over the marketing of the off-highway variants of these engines from 2024. The agreement also includes the distribution of the older mtu Classic series.
“With the takeover of the sales and service operations from Rolls-Royce Power Systems, we are taking the next major step towards growth in our business with modern internal combustion engines,” said Deutz CEO Dr. Sebastian Schulte. “This is an important element that will help us play an active role in the consolidation of the market.”
The takeover advances Deutz’s Dual+ strategy, which aims to boost the development of a green product portfolio while at the same time optimize and further develop conventional engines. When the strategy was presented in January 2023, Deutz announced that it intends to firmly establish itself among the top three independent drive manufacturers, including through acquisitions and cooperations.
“With the earlier access to the engine platforms, we can offer existing and potential customers a much better approach for the transition,” said Deutz chief technology officer and chief strategy officer Dr. Markus Müller. “Customers gain planning security and we benefit from faster market access.”
After the agreement is finalized, Deutz expects additional revenue of around €300 million per year with an EBIT margin exceeding the current group margin. The expected purchase price for the engine portfolio is a high double-digit million-euro amount.
Following a final agreement, the closing, subject to customary approvals, is expected from mid-2024.
