Rolls-Royce has signed an agreement with Siemens to sell its energy gas turbine and compressor business for a cash consideration of £785m.

Under the terms of the 25-year agreement, Siemens will gain exclusive access to future Rolls-Royce aero-turbine technology developments in the 4 to 85MW output range as well as preferred access to supply and engineering services.

The transaction, which is subject to regulatory approvals, is likely to close before the end of December 2014.

Rolls-Royce will also receive a further £200m for a 25 year licensing agreement, upon completion of the transaction.

Rolls-Royce CEO John Rishton said, "This agreement will give the Energy business greater opportunities as part of a much larger energy company and allows Rolls-Royce to concentrate on the areas of business where we can add most value."

Additionally, Rolls-Royce’s shareholding in the Rolls Wood Group (RWG) joint venture, which provides maintenance, repair and overhaul services, will be transferred to Siemens.

Siemens will bridge the technology gap in its extensive gas turbine portfolio with the acquisition of Rolls-Royce’s small and medium aero-derivative gas turbines.