Daimler, Rolls-Royce intent to launch public tender offer for Tognum AG

Daimler AG and Rolls-Royce Group plc announced Wednesday that they intend to launch a public tender offer for 100 percent 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 euro 24 per share in cash representing a total consideration of approximately euro 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.