Rolls-Royce Plans to Buy Rival Jet Engine Maker Allison

British jet engine maker Rolls-Royce will buy competitor Allison Engine Co. for $525 million, the companies announced Monday.

The purchase will allow Rolls-Royce to provide engines to half the markets for military aircraft in the Western World, said John W. Sandford, managing director of Rolls’ aerospace group.

“We see this as an opportunity to grow,” Sandford said at a news conference. “We do not see any closing down of plants.”

It would be the second sale of Allison in just over a year. General Motors Corp. agreed to sell the company last fall for $300 million to Clayton, Dubilier & Rice Inc., a New York investment firm, and a group of Allison managers. The deal was finalized in December.

Under the deal with Rolls-Royce, Indianapolis-based Allison, which employs 4,300 people in three Indiana plants, will keep its name.

The sale, which will be made through the sale of stock, is subject to approval by the U.S. and British governments. Rolls predicted it will acquire the debt-free Allison by spring.

Rolls said the deal would also allow it to centralize its North American aerospace operations. “With time, most of our aerospace business will have a strong presence in Indianapolis,” Sandford said, adding that it might take two to three years.

He said job growth would come through increased sales and relocation of some Rolls employees and operations to Indianapolis.

If the deal is approved, Rolls will promote four new Allison-made aircraft engines that are now entering the marketplace.

Sandford predicted that “99.9%” of Allison managers would remain in place. But Allison Chairman and Chief Executive Blake Wallace said he will be leaving. He said he rejected a job offer from Rolls because it was “not what I intended to do.” Wallace did not define the job.