UPDATE 1-Rolls-Royce could bid for Finland's Wartsila - report

Tue Jan 21, 2014 5:30am EST

HELSINKI Jan 21 (Reuters) - British engineering company Rolls-Royce is expected to make a public offer on the Finnish ship and power plant engine maker Wartsila, a newspaper reported on Tuesday, citing unnamed investors.

Rolls-Royce could offer at least 50 euros per Wartsila share, which would value the company at around 9.9 billion euros ($13.4 billion), Finland's Helsingin Sanomat newspaper said.

It wasn't clear, however, whether the investors had spoken based on speculation or information from the companies. Shares in Wartsila were up 1.9 percent at 41.47 euros by 1010 GMT.

Both companies declined to comment on the report.

Earlier this month, the companies said Rolls-Royce had made a preliminary approach to Wartsila, and added the talks ended without a deal. Wartsila told Reuters that the British company had been interested in buying its entire business.

By buying Wartsila, Rolls-Royce - the world's second-largest aircraft engine maker - would strengthen its marine business, which had lowered its profit guidance in November.

Such a major deal would require Rolls-Royce to issue debt but there are few alternatives if it wants to boost its marine engine business, analysts said.

"There is limited scope for Rolls to do M&A around engines so doing a deal when debt is cheap is not without merit, and as far as we know Wartsila has a quality portfolio that probably has synergy for Rolls' Marine and Power Systems divisions," said analyst Rob Stallard at RBC Capital Markets.

Wartsila's largest owner, with a stake of 22 percent, is a joint venture of Fiskars, which is backed by Finland's Ehrnrooth family, and Investor AB, the investment arm of Sweden's Wallenberg family.

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