Stuttgart/London, Mar 09, 2011
- Combination aims to create a leading global player in the industrial engines market
- The Joint Venture strengthens Tognum’s position and establishes a broader range of products, systems and services as well as global sales network
- Rolls-Royce contributes Bergen gas and diesel medium-speed engine business– further enhancing the growth prospects of Bergen
- Addressing a global market worth more than € 30 billion a year with above average growth
- Strengthens access to emerging economies
- Safeguarding jobs and creating new opportunities through shared capabilities and long term investment
- Attractive offer price of € 24 per share for Tognum shareholders. Premium of around 30 per cent above the XETRA closing price of Tognum shares on Friday March 4, 2011, the last undisturbed trading day before the transaction was rumoured in the markets
- Daimler’s 28.4 per cent stake in Tognum to be tendered to the offer
Stuttgart/London – Daimler AG, the global automotive company and Rolls-Royce Group plc, the global power systems company, announced today that they intend to launch a public tender offer for 100 per cent of the share capital of Tognum AG. The public tender offer is intended to be carried out by a 50:50 joint venture company.
Listed on the Frankfurt Stock Exchange, Tognum AG is a premium supplier of engines, propulsion systems and components for Marine, Energy, Defence, and other industrial applications (often described as “off-highway” applications). Daimler has strong capabilities in engine technology and manufacturing expertise, and exceptional access to global markets. Rolls-Royce has complementary world leading capability in integrated power systems and services, and a well established market presence in the Marine, Energy and Defence sectors.
The proposed joint venture, comprising of Tognum and Bergen, the gas and diesel medium-speed engine business from Rolls-Royce, will offer significant advantages to Daimler, Rolls-Royce and Tognum. The markets in which the Joint Venture will operate are attractive and fast growing, especially in the developing economies. By combining the strengths and market access of these three world-class companies the Joint Venture will be able to offer a compelling portfolio of products, services and integrated solutions on a global basis, thus enabling the Joint Venture to become a world leading engine systems company and creating additional value for shareholders. The partners intend to maintain the current manufacturing sites and are confident that the growth strategy will secure jobs and lead to further opportunities. This may include investment in a new state of the art plant and facilities to enable growth and deliver productivity improvements.
Dr. Dieter Zetsche, Chairman of the Board of Management, Daimler said: “Tognum is an excellent company, and the combination with Daimler and Rolls-Royce creates a win situation for all parties. The planned combination will provide a strong platform to realize the huge market potential. It is an exciting proposition for Daimler to partner with Rolls-Royce to further invest in the Tognum business to create growth for the company and create additional value for our shareholders as well as for the customers and employees of Tognum.”
Sir John Rose, Chief Executive Rolls-Royce Group plc said: “This is a significant opportunity to harness the innovation, technology and engineering expertise of Rolls-Royce, Daimler and Tognum. The complementary capabilities we are bringing together will provide us with a world leading proposition, and will enable us to expand the business by developing a broader portfolio of integrated power systems and services for existing and new customers.”
Daimler and Rolls-Royce will offer Tognum shareholders € 24 per share in cash representing a total consideration of approximately € 3.2 billion. This represents a premium of around 30 per cent above the XETRA closing price of Tognum shares on Friday March 4, 2011, the last undisturbed trading day before the transaction was rumoured in the markets, and a premium of around 22 per cent above the weighted average price of Tognum shares over the three months before the announcement of the transaction. Daimler holds a 28.4 per cent stake in Tognum which will be tendered into the takeover offer at the offer price.
The joint venture allows Daimler to further enhance its shareholding in Tognum. With its engineering and technology competence, Daimler will be a partner in research and development to develop modern and highly efficient engine systems and make a significant contribution to the efforts to meet ever more stringent emission standards. In addition, Tognum will also benefit from leveraging Daimler’s strong global network. Daimler will secure its business relationship with Tognum as an engine supplier and will also continue to add to the Tognum product range with its diesel engines, thus further bolstering its business relationship with Tognum.
Rolls-Royce will contribute its medium speed reciprocating engine business which trades under the Bergen brand name to operate within the new joint venture company. Bergen engines have an outstanding track record for quality and reliability. The portfolio includes diesel and gas powered reciprocating engines which address the marine propulsion and auxiliary power markets. Rolls-Royce also brings a proven capability to deliver complex integrated systems and solutions in these growing markets where customers increasingly require a total solution approach.
The benefits of complementary technologies, a common commitment to innovation, increased focus on systems solutions and through life customer support and broader market access will create considerable growth opportunities. Productivity will be enhanced by the benefits of scale, combining operational capabilities within the venture and delivering improved solutions to the benefit of both customers and shareholders. As such, the combined portfolio will be well positioned to become one of the world’s leading industry players in the Marine, Distributed Power Generation, Offshore Oil & Gas and Industrial applications markets.
Further information on the offer:
The offer will be made subject to clearance by appropriate merger control authorities and achievement of a minimum acceptance threshold of at least 50 per cent plus 1 share (including the 28.4 per cent stake in Tognum to be tendered by the Daimler subsidiary) of the currently issued share capital of Tognum. In addition, the offer will be made on and subject to the terms and conditions to be set out in the offer document.
The shareholder agreement entered into by Daimler and Rolls-Royce, as is customary, contains exit provisions allowing either party to exit the joint venture under certain circumstances, including in the event of a change of control or insolvency of the other partner. Depending on the triggering event, these provisions provide each of the parties the right to exit at cost or fair market value of the venture, subject to any required regulatory consents or approvals. In addition, under certain circumstances, Rolls-Royce could be required to acquire Daimler’s stake in the joint venture at cost subject to certain adjustments.
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