Funds News

Rolls-Royce gives board seat to largest shareholder ValueAct

LONDON (Reuters) - Rolls-Royce has appointed a partner from its largest shareholder ValueAct Capital to its board after the U.S. activist investor built up a stake in the British engineer following a string of profit warnings last year.

Rolls-Royce Chairman Ian Davis said the appointment of Bradley Singer to the board would not change the group’s strategy but would rather bring experience from an executive who has worked with public companies going through periods of change.

“This appointment will not trigger a particular strategic review,” Davis told reporters. “There are no changes to our plan to maintain the broad structure of the company.”

ValueAct’s Singer joins Britain’s flagship engineering company at a time of turmoil.

Profits at the world’s second-largest maker of aircraft engines are set to halve this year after dropping 16 percent in 2015 on tough trading in its civil aerospace unit and as its marine engine business suffered from declining demand from oil and gas customers.

Shares in the company have fallen by 44 percent since its peak in January 2014, and were 0.8 percent higher at 689 pence by 0830 GMT.

Media reports have suggested ValueAct could pressure the company to sell its marine engine unit but Warren East, who became CEO of Rolls in July last year in a bid to steady the group, has told Reuters that the investor backs his plans.

“I have been deeply impressed with the senior leadership team and Directors of Rolls-Royce and their commitment to improving their operations to match the company’s world-class product portfolio and engineering capabilities,” Singer said in a statement.


Founded in 1884, Rolls-Royce the aero-engine maker was separated from the luxury car brand of the same name in the 1970s when it was under state ownership before establishing itself as one of Britain’s most prominent engineering companies.

It increased profit every year in the decade to 2013 but has since repeatedly unnerved investors by slashing forecasts.

East, previously one of Britain’s most successful technology executives who ran ARM Holdings, has set out plans to cut costs and simplify the group. It halved its final dividend to shore up its finances in February, the first cut for 24 years.

Singer is a partner and chief operating officer of ValueAct, which first bought a 5 percent stake in Rolls in July before adding to it in November to own 10.8 percent of Rolls.

ValueAct, which played a key role in shaking up Microsoft Corp’s management, tends to make long-term investments. Singer will join the board with immediate effect and become a member of its Science and Technology Committee.

Davis said the majority of investors had been happy to leave the decision to the company, and that several in the U.S. indicated a positive attitude towards an activist shareholder joining the board.

He also added that Singer would stay on the Rolls-Royce board for as long as ValueAct remained a significant shareholder of the company.

“ValueAct has a record of being a long-term investor ... so we would expect Brad to be on the board for many years.”

Editing by Kate Holton and Susan Thomas