Tognum Snubs $4.6B Offer by Daimler, Rolls-Royce

German diesel engine maker Tognum said a 3.2 billion euro ($4.6 billion) offer by Daimler and Rolls-Royce was too low, and it would not recommend it to shareholders, Reuters reported. The 24 euro-per-share offer was less that the current trading price of Tognum stock. Daimler once owned all of Tognum but sold it to Swedish private equity group EQT for 1.6 billion euros in December 2005. It then bought back more than 20% in April 2008, Reuters wrote.

(Reuters) – German diesel engine maker Tognum said a 3.2 billion euro ($4.6 billion) offer by Daimler and Rolls-Royce was inappropriate and said it would not recommend it to shareholders.

The move comes after a raft of investors, including Dutch bank ING and activist investor Guy Wyser-Pratte, balked at the 24 euro-per-share offer, which is less than the current market price of Tognum stock.

The offer already started on April 6, and shareholders have time until May 18 to tender their shares to German carmaker Daimler and British engine maker Rolls-Royce.

Tognum shares were 1 percent higher at 26.20 euros at 1232 GMT, above the offer price, indicating investors have not yet given up on a better deal.

If the two bidders succeed with the takeover, Rolls-Royce will expand its marine and diesel power business. Daimler will re-establish closer ties with a major buyer of its truck diesel engines, which are retooled by Tognum for other purposes.

The two hope to tap into a global market worth more than 30 billion euros a year that is growing at above-average rates.

The offer is contingent on Daimler and Rolls-Royce gaining control of at least half of Tognum’s equity plus one share. Daimler already holds 28.4 percent of the Friedrichshafen, Germany-based company.

Daimler once owned all of Tognum but sold it to Swedish private equity group EQT for 1.6 billion euros in equity and debt in December 2005. It then bought back more than 20 percent in April 2008, the year after its former unit went public.

(Reporting by Maria Sheahan)

($1=.6945 Euro)