Rolls and Daimler get upper hand at Tognum
Rolls-Royce and Daimler have secured control of German engine maker Tognum after a sweetened £3bn offer won them a near-60% stake in the firm.
Lead player: Roll-Royce wants to strengthen its position in the industrial engines market
The pair upped their bid to €26 (£23.20) per share, which swung the support of Tognum's management and allowed their joint venture Engine Holding to increase its shareholding to 58.35%.
A previous €24 (£21.40) per share bid had been rebuffed on the grounds it undervalued the company.
Rolls plans to combine Tognum with its own Bergen business, which makes engines used across the maritime and power generation sectors, in what is one of the biggest deals in its 100-year history.
Its shares fell 1p to 628p in trading today.
Car giant Daimler, owner of Mercedes Benz, already owns 28.4% of Tognum, which is best known as a supplier of engines for ships and trains through its MTU subsidiary.
The deal will allow Daimler to forge closer ties with Tognum, one of its biggest buyers of engines.
Derby-based Rolls said today's development represented a milestone in the takeover of Tognum and laid a strong foundation for the co-operation of the three companies.
Rolls expects more shares to be tendered over the following two weeks as part of an extended acceptance period.
It has said the joint-venture between the three companies will establish a leading player in the industrial engines market, strengthening Tognum's own position while establishing a broader range of products.
Rolls estimates the market is worth more than £25.8bn a year and boasts above average growth.
Tognum, which employs some 9,000 people and specialises in high-speed diesel engines and propulsion systems, generated revenues of £2.1bn in 2009. It recently celebrated its centenary, having started out as a maker of engines for airships in 1909.
MTU's UK division supplies diesel and gas engines and systems to the marine, power generation and rail markets from its base in East Grinstead, West Sussex.
Rolls recently revealed it made underlying pre-tax profits of £955m in 2010, an increase of 4% on a year earlier.
Its Bergen business, which will be rolled into the 50:50 joint-venture with Daimler, takes its name from the town on the west coast of Norway where it has been manufacturing engines since 1943. It has around 900 staff and annual revenues in the region of £344.5m.
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