Daimler, Rolls-Royce considering a joint bid for diesel engine maker Tognum

Article by Christian Andrei, on March 8, 2011

Daimler AG and British aircraft engine manufacturer Rolls-Royce are in talks on the possibility of making a joint bid for enginemaker Tognum AG in a deal that sources say could be worth about EUR3 billion ($4.2 billion). Daimler and Rolls-Royce said “constructive discussions” with Tognum’s management board and supervisory board are ongoing.

Tognum makes engines for every industrial application including trains, yachts and small, decentralized power plants.

Daimler has a 28.4 percent share in Tognum, which is a heavy diesel engine maker, says Autonews. Rolls-Royce is a different firm from the BMW AG-owned Rolls-Royce car brand. However, Daimler and Rolls-Royce say that no final deal has been made.

Sources say Daimler was considering a price of about EUR24 per share – nearly 30 percent above the latest closing price - whereas Tognum was asking for more. Daimler sees it as a move to defend their supply chain and investment.

A source explained that Tognum rivals like Caterpillar are interested in Tognum. Another source said that Rolls-Royce, as part of the deal, would add its marine business that accounts for around a fifth of the group's revenues to Tognum, which leads the high-speed marine engine market for faster and smaller boats.

Topics: daimler, rolls-royce

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