Rolls-Royce and Daimler in £3.4bn swoop

Rolls-Royce and Daimler have seized control of German engine maker Tognum after their improved €3.4 billion (£3bn) offer was accepted by a majority of shareholders.

Tognum last month rejected a €24 per share bid from the two companies, saying it undervalued the company, but an improved offer of €26 was accepted by 58.35 per cent of shareholders, after winning the support of the management, it emerged yesterday.

Rolls and Mercedes Benz-owner Daimler have bought a further 1.5 per cent of the shares on the stock market, meaning their joint-venture, Engine Holding, now controls nearly 60 per cent of the stock.

Rolls said the news was a milestone in the takeover of Tognum and laid a strong foundation for the co-operation of the three companies. The company expects more shares to be tendered over the following two weeks as part of an additional acceptance period.

In one of the biggest deals in its 100 year history, Rolls plans to combine Tognum with its own Bergen business, which makes engines used across the maritime and power generation sectors.

Rolls has said the joint-venture between the three companies will establish a leading player in the industrial engines market, strengthening Tognum's own position while establishing a broader range of products.

It estimates the market is worth more than €30bn a year and boasts above average growth.

Rolls recently revealed it made underlying pre-tax profits of 955 million in 2010, an increase of 4 per cent on a year earlier.

Its Bergen business, which will be rolled into the 50:50 joint-venture with Daimler, takes its name from the town on the west coast of Norway where it has been manufacturing engines since 1943.

It has around 900 staff and annual revenues in the region of €400m.

Tognum, which employs some 9,000 people and specialises in high-speed diesel engines and propulsion systems, generated revenues of €2.5bn in 2009. It recently celebrated its centenary having started out as a maker of engines for airships in 1909.

Car giant Daimler already owns 28.4 per cent of Tognum, which is best known as a supplier of engines for ships and trains.

The deal will allow Daimler to forge closer ties with the firm, which is one of its biggest buyers of engines.

Tognum's UK division supplies diesel and gas engines and systems to the marine, power generation and rail markets from its base in West Sussex.