US activist investor to join board at Rolls-Royce

ROLLS-ROYCE is preparing to give an American activist shareholder a seat on its board as it battles to bounce back from a string of profit warnings, writesRupertSteiner.

The troubled British engineering giant has held talks with ValueAct after the San Francisco-based investor built up a 10pc stake in the business, which has made it the biggest shareholder.

ValueAct, which has pushed for change at companies including Microsoft and Sara Lee, tends to take a less confrontational approach to shaking up businesses than other activist investors. A Rolls spokesman said: ‘We’re engaged in constructive discussions with ValueAct and no decision has yet been taken.’ Shares in the engineer, which have halved over the past 10 years, rose 4.51pc or 28.50p to 660p.

Rolls cut its dividend for the first time in 24 years last week as it announced a fall in profits and warned that more job cuts are on the way. In the past two years Rolls has issued five profit warnings as governments and airlines reined in their spending.

Sources said ValueAct is not seeking a break-up of the firm and that it is aligned with Rolls on most areas of its strategy.

It had been thought it wanted to see non-essential parts of the business sold.

A decision on a board position could come in time for Rolls’ annual meeting in May.