Frankfurt: Daimler and Rolls-Royce have secured a 60% stake in engine maker Tognum with a sweetened takeover bid, expanding their presence in higher margin industrial diesel engines.
However, the bidding consortium fell short of its initial goal, which was to win full control of Tognum, a manufacturer of military and ship engines once owned by Daimler.
In May 2011 German car and truck maker Daimler and Britain’s Rolls were forced to raise their offer to €26 ($38.07) a share, raising it from an initial €24 a share bid and valuing the diesel and gas engine maker at €3.4 billion.
They hope to tap into a global market worth more than €30 billion a year that is growing at above average rates.
But to gain access to intellectual property in the form of patents, and to enable a profit transfer agreement, bidders for German companies need to have control of at least 75%.
Daimler and Rolls said on Monday that winning majority control laid a strong foundation for future co-operation between the three companies.
The initial takeover offer expired on 1 June 2011, but this has been extended and investors now have until 20 June to tender their shares, Daimler said.
Tognum produces diesel and gas turbine engines for tanks, armoured vehicles, generators, cranes, trains and ships, where margins have not been squeezed as hard as in the auto sector.
Volkswagen recently made a similar move to expand into high-margin niche engines with its offer for Munich based MAN, in part because of the MAN Diesel and Turbo unit, specialised in large ship diesel engines.
For Daimler, which owned all of Tognum until selling the unit in 2005, the deal will allow it to tighten its grip on a major buyer of its truck diesel engines, which are retooled by Tognum for specialised uses.
The takeover will also allow Rolls to expand its marine and diesel power units, bulking up its existing Bergen marine and auxiliary-power engine business.
The bidding consortium said it had received acceptances representing 58.35 % of the share capital of Tognum and bought a 1.52% stake on the stock market during the acceptance period. Daimler already owned 28.4% of Tognum. It sold the company to Swedish private equity group EQT for €1.6 billion in equity and debt in December 2005.
But it then bought back more than 20% in April 2008, the year after its former unit went public.