Former off-highways unit returns to Daimler fold

03 May 2008

Daimler AG has acquired a 22.3-per cent stake in its former off-highways unit, which it divested in 2005 to private equity private equity firm EQT.  Prior to the divestment, Tognum AG brands and companies operated as the MTU Group under Daimler before being renamed in July 2006.

Tognum  AG reported 2007 revenues of approximately $4.31 billion. Daimler says it expects to conclude the transaction in the third quarter of 2008 at the latest, after receiving antitrust and other regulatory approvals.

In the short to medium term, Daimler plans to acquire a blocking minority stake in Tognum and has arranged to acquire an additional 1 per cent of stake to prevent hostile bidders for it.

Daimler disposed of its off-highway activities at the end of 2005 as the company then faced numerous operational challenges and was about to consolidate its operations. This led to Daimler preferring to focus on its own core business, rather than make the fresh investments required to improve Tognum's competitiveness.

EQT bought the entire 100-per cent stake in the MTU Group of companies from Daimler AG  turning its operations around. Tognum's business has since then shown annual double-digit growth, with profits having increased significantly.

In 2007 EQT took the company public with a listing on the Frankfurt Stock Exchange, retaining a minority 22.3-per cent stake, which it has now sold to Daimler for $30.84 per share, amounting to approximately $902 million. The acquisition makes Daimler the largest shareholder in Tognum.