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It’s A Deal

Posted on May 18, 2011

While some formalities remain, it appears that Daimler AG and Rolls-Royce Group Plc, through a 50-50 joint venture, have successfully concluded their US$4.8 billion (€3.3 billion) friendly takeover of Tognum AG. Daimler and Rolls-Royce will use “existing cash resources” to pay for the deal, the companies said. Tognum board members agreed to tender their combined 5% stake after Daimler and Rolls-Royce increased the bid by 8.3%. Together with Daimler’s existing 28.4% stake, Daimler and Rolls-Royce can complete the deal at the reduced acceptance threshold of 30% without the backing of other Tognum shareholders.

The initial offer, made March 9, was conditional on at least 50% of Tognum shareholders accepting the bid. Daimler’s stake in Tognum allows it to block efforts by other potential suitors, because shareholders with more than 25% of any German company have the power to veto major strategic moves. Heuer, CFO Joachim Coers and board member Rainer Breidenbach together owned 5.3% of shares as of the end of 2010. Daimler and Rolls-Royce extended the acceptance period for their offer until June 1.

The Tognum Group’s products are based on diesel engines with up to 9100 kW, gaseous fueled engines up to 2150 kW and gas turbines up to 45 000 kW. The company’s Engines business unit comprises MTU engines and propulsion systems for ships, for heavy land, rail and defense vehicles and for the oil and gas industry. Its Onsite Energy & Components business unit includes distributed energy systems and fuel-injection systems from L’Orange.

In 2010, Tognum generated revenue of around US$3.47 billion (€2.56 billion) and employs more than 9000 people. Under the deal Tognum facilities globally will remain, Friedrichshafen, Germany, remains the company’s headquarters and the research, development and production site for propulsion systems and energy systems.

For more information: www.tognum.com

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