Tognum Surges on Squeeze-Out Theory: Frankfurt Mover

(Corrects shareholding in first and seventh paragraphs in story originally published on Sept. 14.)

Tognum AG (TGM), the German engine maker acquired by Daimler AG (DAI) and Rolls Royce Holdings Plc (RR/), climbed to a record in Frankfurt trading amid speculation the majority shareholders may offer a higher price for the stock they don’t own.

Tognum shares rose as much as 11 percent to 29.10 euros, the highest since the Friedrichshafen-based company first sold shares to the public in 2007 for 24 euros apiece. The stock traded as low as 6.35 euros in 2009, according to data compiled by Bloomberg.

Tognum today said today that Ernst & Young GmbH auditors commissioned by the company valued the stock at 25.46 euros, one euro less than the price determined by the German Financial Supervisory Authority BaFin following an agreement to transfer profits and losses on June 19.

The higher price will be applied when determining the settlement to be offered to minority shareholders in a so-called squeeze-out, Tognum said in a statement. A shareholder meeting to approve the agreement is scheduled for Nov. 15, it said.

“There are parties in the market betting on some form of sweetened offer so the buyers can proceed with a squeeze-out,” Heinz Steffen, an analyst at Fairesearch, said by telephone. “The problem is the shareholders that have tendered already will likely not participate in this.”

In Germany, shareholders owning at least 95 percent of a company have the right to force out remaining investors. Tognum recommended an improved offer from Daimler and Rolls-Royce in May 2011, valuing the company at 3.4 billion euros at the time.

The companies control more than 99 percent of Tognum, James Milton, a spokesman for Rolls Royce, said. “The squeeze-out procedure is progressing according to plan,” said Florian Martens, a Daimler spokesman.

To contact the reporter on this story: Richard Weiss in Frankfurt at rweiss5@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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