Rolls-Royce Could Bid For Finland's Wartsila: Report

British engineering company Rolls-Royce (RR.
L) is expected to make a public offer on the Finnish ship and power plant engine maker Wartsila (WRT1V.

HE), 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 (FIS1V.

HE), which is backed by Finland's Ehrnrooth family, and Investor AB (INVEb.

ST), the investment arm of Sweden's Wallenberg family.

REUTERS