Rolls-Royce is the UK’s leading developer and manufacturer of both civil and military aero-engines, power systems: Private Equity Assignment, ICL, UK

University Imperial College London (ICL)
Subject Private Equity

Rolls-Royce is the UK’s leading developer and manufacturer of both civil and
military aero-engines, power systems, and other key products, and has a current market capitalization of £6.5 billion.

  1. Is Rolls-Royce PLC a suitable LBO target and why?
  2. Assuming that the share price declines to a level where a transaction makes economic sense, would you bid as a private equity consortium or would you be from a group comprising industry or sovereign wealth investors also, and who would be the ideal candidates?
  3. What kind of investment horizon is needed for this transaction?
  4. Would you buy the entire group or only certain divisions, and if so, which ones and why?
  5. What are the political obstacles to this transaction? Please note that the British Government no longer has any economic interest in Rolls-Royce, but has a ‘Golden Share’ which gives it a veto right on any acquisition of the company.

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