Daimler, Rolls stick to $4.6bn Tognum offer
Frankfurt, April 16, 2011
Daimler and Rolls-Royce stuck to their 3.2 billion euro ($4.6bn) offer for Tognum, dismissing the German diesel engine maker's assertion that it was too low.
'The offer we have made has a compelling industrial logic and represents the best prospect for accelerating long-term growth and is in the best interest of Tognum, its customers and employees,' the two bidders said in a joint statement.
A raft of investors, including Dutch bank ING and activist investor Guy Wyser-Pratte, have balked at the 24 euro per share price, which is below the current market level.
Tognum said yesterday it would not recommend the offer to shareholders.
'The offer price notably fails to reflect the capital expenditure carried out in recent years and the growth prospects for the Tognum Group,' Tognum said.
It said that the offer matched the 24 euro issue price when Tognum floated in 2007 and so did not reflect any net debt reductions since then.
The offer was launched on April 6. Shareholders have until May 18 to tender their shares to German carmaker Daimler and British engine maker Rolls-Royce.
Daimler has said it did not intend to pay more than 24 euros per share.
If both bidders succeed with the take-over, Rolls-Royce will expand its marine and diesel power business. Daimler will re-establish closer ties with a major buyer of its truck diesel engines, retooled by Tognum for other purposes.
The two hope to tap into a global market worth more than 30bn euros a year that is growing at above-average rates.
The offer is contingent on Daimler and Rolls-Royce gaining control of at least half of Tognum's equity plus one share.
Daimler holds 28.4 per cent of the Friedrichshafen, Germany-based company.
It once owned all of Tognum but sold it to Swedish private equity group EQT for 1.6bn euros in equity and debt in December 2005.
It then bought back more than 20 per cent in April 2008, a year after its former unit went public.-