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Daimler, Rolls-Royce form JV to acquire Tognum

ABR Staff Writer Published 09 March 2011

Daimler, the global automotive company and Rolls-Royce Group, the global power systems company have formed a joint venture to buy German engine maker Tognum for EUR3.2bn ($4.4bn).

The two companies said their 50-50 joint venture will offer euro 24 per share for all the share capital of Tognum.

The joint venture would also acquire the 28.4% stake that Daimler already holds in Tognum, which is based in Friedrichshafen, Germany.

The joint venture would also take over Rolls-Royce's Bergen engine division.

Tognum is a premium supplier of engines, propulsion systems and components for Marine, Energy, Defence, and other industrial applications.

Daimler has strong capabilities in engine technology and manufacturing expertise, and access to global markets. Rolls-Royce isleading manufacturer of integrated power systems and services, and a well established market presence in the Marine, Energy and Defence sectors.

Dieter Zetsche, chairman of the board of management, Daimler said that 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," Zetsche said.

Rolls-Royce Group chief executive John Rose said that 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," Rose added.

The partners intend to maintain the current manufacturing plants and are confident that the growth strategy will secure jobs and lead to further opportunities. This may include investment in a new plant and facilities to enable growth and deliver productivity improvements.

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 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. The portfolio includes diesel and gas powered reciprocating engines which address the marine propulsion and auxiliary power markets.