ROLLS-ROYCE AND DAIMLER ANNOUNCE JOINT VENTURE COMPANY AND INTENT TO LAUNCH A PUBLIC TENDER OFFER FOR TOGNUM AG

Wednesday, March 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, 4th 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  new  state  of  the  art  plant  and  facilities  to  enable  growth  and  deliver  productivity improvements.
 
Dr.  Dieter  Zetsche,  Chairman  of  the  Board  of  Management  of  Daimler  AG,  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 realise 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 30 per cent above  the XETRA closing price of Tognum shares on Friday March, 4th 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. 
 

Source: ROLLS-ROYCE

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