British engineering giant Rolls-Royce and German car major Daimler are offering €3.2 billion for the engine manufacturer Tognum.
If the deal were to go through it would create a joint venture that would include Bergen engine business of Rolls-Royce and Daimler's existing 28 per cent stake in Tognum.
With the offer, Tognum investors would get a 30-per cent premium on the stock price on the last trading day before rumours of a potential bid were received at the markets at the start of the week.
However, according to some analysts the two companies would have to up their offer to secure the sale.
Tognum makes engines and propulsion systems for ships, trains and industrial vehicles. With the venture with Bergen, it would focus on fast-growing markets, particularly in developing countries, the two companies said yesterday. Rolls Royce chief executive, Sir John Rose, pointed out the strategic fit between the businesses.
"This is a significant opportunity to harness the innovation, technology and engineering expertise of Rolls-Royce, Daimler and Tognum," he said. "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."