Rolls-Royce ends talks with Finnish engineer Wärtsilä

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Engine maker Rolls-Royce has said it had made an approach to buy Finnish engineer Wärtsilä , but that talks have already ended.

Today’s statement followed reports that the Westminster-based manufacturer was looking to buy Wärtsilä’s marine division, which supports the British Navy, P&O Ferries and BP Shipping.

However, it turned out that Rolls was willing to bet an even bigger chunk of its balance sheet by buying out the whole of Wärtsilä , a group that had sales worth more than €4.7 billion (£3.9 billion) in 2012.

Although the failed approach left investors unimpressed, with the share price edging down, the news will again fuel speculation that Rolls wants to strengthen its non-aerospace work through a major deal.

About 18 months ago, there were suggestions defence contractor BAE Systems had wanted to create a £25 billion British manufacturing champion through a tie-up with Rolls.

RBC Capital analyst Robert Stallard said the talks “could suggest to the market that Rolls is on the M&A path”. Rolls is certainly in a position to gobble up smaller rivals, having traded strongly on the stock market in recent months.

 In October, the shares had fallen below 1100p, but even the launch of a Serious Fraud Office investigation into bribery allegations in China and Indonesia have failed to impede its march

The company said: “Rolls-Royce notes the recent press speculation and confirms that it has been in preliminary discussions with the board of Wärtsilä regarding a possible offer for the company. However, those discussions are no longer continuing.”

Wärtsilä  said: “In case the company receives such proposals, the board has an obligation to evaluate such proposals. However, there are no longer ongoing discussions.”