Norway suspends sale of Rolls-Royce asset to Russian company


The government of Norway suspended the sale of Bergen Engines, a Norwegian engine maker owned by Rolls-Royce Holdings, to THM Group, a company controlled by Russia.

The Norwegian National Security Authority (NSM) expressed doubts over the $178 million sale of the Norwegian engine manufacturing company owned by Britain’s Rolls-Royce to Russian-controlled company THM Group. The deal is being assessed due to the security-related implications for Norway‘s navy and the civilian sector. On March 9, 2021, the government of Norway announced the suspension of the sale arguing that there was “significant uncertainty in relation to national security interests” related to the deal.

Speaking to the media, Monica Mealand, the Justice Minister of Norway, outlined that the country‘s authorities had an „uncertainty that must be dealt with“ before the sale could be approved. Following Norwegian law, while the NSM assesses the corporate takeover, the sale must be put on hold. It is difficult to estimate how long the process of assessment could take because the authorities have to evaluate what wider implications the commercial move could have on the country‘s security. Bergen Engines is one of the suppliers for Norway navy, it manufactures diesel engines for marine and power generation customers.

“It must be decided under Norway’s security law whether the new owners would get access to sensitive information. […] If a Russian firm acquires a leading maker of engines, it could also give the Russian navy access to new technology.” Jakub Godzimirski, a research professor at the Norwegian Institute of International Affairs, said pointing out that the authorities must assess all potential threats to national Norway’s security.

The British engine manufacturer Rolls-Royce aimed to sell Bergen Engines to TMH Group following its disposal plan which should help the company to reduce the losses suffered during the COVID-19 crisis. The potential new owner of Bergen Engines, TMH Group, said it would cooperate with Norwegian authorities aiming to finalize the deal and complete the suspended transaction.

“We are fully aware of and take seriously our export control compliance obligations. […] This will include those obligations that relate to Bergen Engines, relating to the protection of any controlled technology including to prevent it being used for unauthorized end-use.” TMH expressed its position.

Meanwhile, Rolls-Royce said it had informed the Norwegian government before announcing the sale of Bergen Engines and outlined that the sales process was paused.

In 2019, Norway implemented a new national security-related law under which the government received the right to suspend foreign acquisitions when the national country‘s interests are involved.

 





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