Tognum looking for more than Rolls-Daimler bid

Rolls-Royce and Daimler yesterday unveiled a takeover offer worth €3.2 billion (£2.7bn) for diesel engines maker Tognum but failed to get management support, fuelling speculation of a higher bid.

While Tognum said there was a deal in principle, it warned that price was a sticking point, raising expectations that the duo would have to increase their €24-a-share cash offer.

Rolls plans to combine Germany's Tognum with its own Bergen business, which makes engines used across the maritime and power generation sectors, in what would be one of the biggest deals in its history.

Mercedes-Benz maker Daimler already owns 28.4 per cent of Tognum, which is best known as a supplier of engines for ships and trains through its MTU subsidiary.

The offer to Tognum shareholders would see Rolls contribute its Bergen business into a 50:50 joint venture company set up with Daimler, with the two companies holding a controlling stake of at least 50 per cent plus one share.

The Derby-based firm's chief executive Sir John Rose said the proposed deal represented a "significant opportunity" to harness the innovation, technology and engineering expertise of Rolls, Daimler and Tognum.

Rolls, which employs some 2,000 people in Scotland at plants in Glasgow, East Kilbride, Thurso and Dunfermline, said the proposed combination would create a leading player in the industrial engines market.

Rolls's Bergen business takes its name from the town in Norway where it has been manufacturing engines since 1943. It has about 900 staff and had revenues of 344m in its latest full year.

Tognum, which employs 8,700 people and specialises in high-speed diesel engines and propulsion systems, started out making engines for airships in 1909.

Shares in Tognum yesterday traded above the €24 mark as investors betted on a higher bid.