German engineering giant Siemens on Tuesday announced it would buy the energy production arm of Britain's Rolls Royce for 950 million euros ($1.3 billion) to strengthen its standing in the oil and gas industry.

"Siemens is acquiring the Rolls-Royce Energy aero-derivative gas turbine and compressor business and thereby strengthening its position in the growing oil and gas industry as well as in the field of decentralized power generation," the firm said in a statement.

"The transaction is expected to close before the end of December 2014."

Originally developed for use in the aviation industry, Rolls-Royce Energy's compact and highly efficient gas turbines are "an attractive power supply option in the oil and gas industry", especially on off-shore oil platforms where space is limited, Siemens said.

The acquired business has around 2,400 employees, and delivered revenue of some 1.1 billion euros ($1.5 billion) in 2013.

Siemens, which unveiled a new strategic plan to focus on the growth fields of electrification, automation and digitalisation dubbed "Vision 2020", also announced plans to publicly list its audiology business which makes hearing instruments.

The company said a streamlining of its organisational structures to reduce bureaucracy and cut costs by 2016 will result in a productivity increase of one billion euros ($1.4 billion).

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SIEMENS

ROLLS-ROYCE HOLDINGS

ALSTOM