Daimler CEO Dieter Zetsche inks deal with rival Rolls.
Daimler AG and Rolls-Royce plc, the maker of aircraft and other engines, have organized a new joint venture company aimed at a takeover of Tognum AG, a maker of heavy-duty engines.
The goal of the new venture, which is offering to pay Tognum shareholders a 30% premium for their stock, is to create a leading company in the industrial engines market. The joint venture will strengthen Tognum’s position and establishes a broader range of products, systems and services as well as a global sales network in market valued at $40 billion annually.
The company will be owned 50-50 by Daimler and Rolls-Royce, which also will contribute its Bergen gas and diesel medium-speed engine business – further enhancing the growth prospects of Bergen. Rolls-Royce also will contribute its medium speed reciprocating engine business which trades under the Bergen brand name to operate within the new joint venture company. Engines from Bergen, which is based in Norway, include diesel and gas-powered reciprocating engines used for marine propulsion and auxiliary power markets.
Daimler’s 28.4% stake in Tognum also will be transferred to the new venture.
The two companies said in a statement that 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 Defense sectors.
The new venture 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, said Dieter Zetsche, chairman of Daimler AG’s management.
“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,” observed Zetsche.
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, he 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,” said Sir John Rose, Chief Executive Rolls-Royce Group plc.