Wärtsilä has entered into an agreement with China State Shipbuilding (CSSC) to establish a joint venture (JV), which will acquire Wärtsilä’s two-stroke engine business.
CSSC’s subsidiary CSSC Investment and Development will own a 70% stake in the JV, while Wärtsilä will hold the remaining stake.
Under the deal, Wärtsilä and CSSC will work together on two-stroke engine technology and develop and promote sales of the two-stroke engine portfolio. Wärtsilä Services will be responsible for servicing the engines through its global network.
The deal also calls for CSSC to transfer its position as a shareholder to a JV established by an entity, associated with the Shanghai Government and CSSC.
The transaction, which is valued at around €46m, is expected to receive regulatory approvals in early 2015. It is expected to accelerate the company’s growth in Asian markets, according to Wärtsilä.
The JV will be based in Winterthur, Switzerland, and retain the existing two-stroke engine business management team.
Wärtsilä ship power senior executive vice-president Jaakko Eskola said: "CSSC shares our vision for the future of the two-stroke marine engine market and we feel that this agreement will benefit both parties, as well as the entire shipping sector.
"By enhancing the sales volume of Wärtsilä’s two-stroke engines, product development can be accelerated and critical new engine solutions can be brought to the market much faster than earlier."
CSSC vice-president Wu Qiang said: "We are very pleased that this agreement has been made and we look forward to working closely with Wärtsilä in this JV project."
In addition, the companies agreed to establish CSSC Wärtsilä Engine (Shanghai) facility at Lingang, Shanghai, to produce medium and large bore medium-speed diesel and dual-fuel engines.
The facility will cater to offshore, LNG and very large container vessels markets, and is expected to deliver its first engine by end of 2015, Wärtsilä said.