Wartsila announces that it will divest its shares in the Qingdao Qiyao Wartsila MHI Linshan Marine Diesel Co. Ltd (QMD), the joint venture company established for manufacturing large low-speed marine diesel engines. Wartsila s shares in the joint venture will be transferred to the current majority shareholder, Qingdao Qiyao Linshan Power Development Co Ltd, a company fully owned by China Shipbuilding Industry Corporation. The agreement was signed today in Beijing, China. The value of the transaction is not significant. The deal will have a positive effect on Wartsila s continuing operations but the impact is not significant. The closing of the transaction is subject to the required regulatory approvals.
The divestment comes as a result of the announcement made on July 18th 2014 regarding WÄrtsilÄ and China State Shipbuilding Corporation (CSSC) joining forces to establish a new joint venture, which will take over Wartsila s 2-stroke engine business. Through this agreement, CSSC will own 70 per cent of the business through its affiliate CSSC Investment and Development Co. Ltd, while Wartsila will hold a 30 per cent ownership position. The parties will co-operate in 2-stroke engine technology, marketing, sales, and service activities. In this new context, the 2-stroke business currently owned by Wartsila will focus on its core activities, including technology development, licensing, product management as well as sales and marketing of 2-stroke engines. Manufacturing will be delegated entirely to licensees.
The move to divest manufacturing assets will free up resources and increase our emphasis on accelerating the development of new engines and advanced technologies. In particular, Wartsila s unique low-pressure dual-fuel two-stroke engine development, the further expansion of the environmentally friendly Generation X -engines, as well as emission reduction technologies will benefit from this increased focus, says Martin Wernli, Vice President, Wartsila Ship Power, 2-stroke and Managing Director, Wartsila Switzerland Ltd.
QMD will continue to manufacture Wartsila low-speed marine engines under license from Wartsila via the new joint venture with CSSC. The currently valid license agreement will not be affected by the transaction. QMD was established by China Shipbuilding Industry Corporation (CSIC), Wartsila Corporation, and Mitsubishi Heavy Industries Ltd (MHI) in 2006. The joint-venture agreement was signed by Qingdao Qiyao Linshan Power Development Co Ltd (QQLPDC) and Panda Shinco Holding BV (PSH). At that time, QQLPDC was jointly owned by Yichang Marine Diesel Plant (YMD) and Shanghai Marine Diesel Engine Research Institute (SMDERI), both being underlying units of CSIC. PSH is jointly owned by Wartsila and MHI.