Frankfurt: Daimler and Rolls-Royce are on track to win control of Tognum as some shareholders buckled and followed the engine maker’s management with a pledge to tender their shares.
Some large investors buried the hatchet and called the improved offer -- which was raised to €26 from €24 a share -- “fair”, after earlier having asked for around €30 a share.
Others still expressed reservations but may decide to tender so not to be left in the cold as small shareholders in a group dominated by Daimler and Rolls-Royce.
“It looks like a done deal. We do not want to stay in as a minority shareholder, so it looks like we will tender,” said fund manager Edwin Slaghekke from Delta Lloyd Asset Management, which owns roughly 1% of Tognum shares.
On Monday, Tognum welcomed the improved offer, which also has a lowered acceptance threshold of 30%. Tognum said all members of its supervisory and management board holding shares would tender them.
The increased offer values Tognum at €3.4 billion ($4.83 billion), the equivalent of 11.3 times recent annual core earnings, a discount to rival Cummins, but a premium to Wartsila .
“We have ambiguous feelings,” fund manager Slaghekke said, adding Delta Lloyd had invested at an average price of €14 , but would have preferred to stay invested another five years and see the share price rise to levels well above €30 .
“Now, we have to reallocate the money. It is difficult to find investment opportunities with the same quality as Tognum,” he said.
Helmut Bartsch from fund manager LBBW Asset Management, which holds about 100,000 Tognum shares according to Thomson Reuters data, mirrored his view. “It does make sense to accept the offer,” he said, adding no final decision had been taken.
“The €26 a share looks fair under the given circumstances,” he said.
ING Investment Management, Tognum’s second biggest shareholder after 28.4% shareholder Daimler, said it had not decided what to do with its 9% stake.
“We are studying the offer,” a spokesman for the group said, which had earlier asked for the offer to be raised to 30-32 euros a share.
Some hedge funds remained unconvinced.
“€26 is pretty borderline. It is much less than the €28 we had hoped for,” a hedge fund manager said.
Tognum had said on Saturday that Daimler and Rolls Royce had signalled in talks they were willing to raise their bid to €26 if they got Tognum’s backing.
Earlier, Daimler had said it would not raise its offer, which had been rejected by institutional and retail investors.