Daimler, Rolls-Royce Secure 94% of Tognum in Takeover Offer

Daimler AG (DAI) and Rolls-Royce Group Plc (RR/) secured 94 percent of Tognum AG (TGM) after a sweetened bid attracted investors to the offer that values the German engine maker at about 3.4 billion euros ($4.8 billion).

A total of 123.7 million shares were tendered in the offer that ended on June 20, Stuttgart, Germany-based Daimler said today in a statement. Daimler and Rolls-Royce will probably complete the transaction in the third quarter after regulatory clearance, it said.

Tognum, which is based in Friedrichshafen, is the world’s second-biggest manufacturer of high-speed diesel engines for the marine, energy and defense industries, after Caterpillar Inc. (CAT) London-based Rolls-Royce, whose engines power Airbus SAS and Boeing Co. planes, plans to sell Tognum its Bergen business, which makes engines for ships and power generators, to compete with Caterpillar.

“We see great potential in this global market worth more than 30 billion euros a year,” Daimler Chief Financial Officer Bodo Uebber said in the statement. “We are very pleased with the final acceptance rate.”

Raised Bid Price

Daimler and Rolls-Royce, which are 50-50 partners in the transaction, stoked investor interest by raising the offer 8.3 percent to 26 euros a share on May 16, after Tognum rejected the initial bid as too low. The shareholder acceptance of the bid far exceeds the buyers’ threshold of 30 percent, which was lowered from 50 percent when the offer was increased.

Tognum rose as much as 39 cents, or 1.5 percent, to 25.93 euros and was up 1.2 percent at 9:55 a.m. in Frankfurt, valuing the company at 3.4 billion euros.

The engine manufacturer was formerly a unit of Daimler. The maker of Mercedes-Benz cars and trucks sold Tognum, then called MTU Friedrichshafen, for 1.6 billion euros to Stockholm-based private equity firm EQT Partners in March 2006 to help pay for reorganizing Chrysler, the U.S. carmaker it owned at the time.

After Tognum’s initial public offering, Daimler bought a 22 percent stake for 585 million euros in April 2008, raising the holding to more than 25 percent three months later. Daimler contributed its 28.4 percent holding in the engine maker as part of the deal.

To contact the reporter on this story: Chris Reiter in Berlin at creiter2@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net