Daimler, Rolls-Royce in Discussions on Joint Takeover of Industrial Engine Maker Tognum

Daimler AG and Rolls-Royce Group Plc are considering a joint bid for Tognum AG, a German maker of heavy-duty engines used in tanks and ships, as they invest cash from booming sales, according to reports from Automotive News Europe and Bloomberg. Rolls-Royce Group Plc is an aviation and industrial engine manufacturer, no longer affiliated with Rolls-Royce automobiles, which is now a subsidiary of BMW.

“Daimler AG confirms that together with Rolls-Royce, it is in discussions about the possibility of acquiring the majority of Tognum AG in equal shares,” Daimler and Rolls-Royce said. “Currently, constructive discussions with the supervisory board and management board of Tognum are being held,” the two companies said in a joint statement.

Gaining control of Tognum, which Daimler previously owned outright, would give the two companies the world’s second-largest maker of high-speed diesel engines for the marine, energy and defense industries after Caterpillar Inc.

Daimler, which supplies Tognum with motors, is already the company’s largest shareholder. The auto manufacturer owns 28 percent of Tognum, which was formerly a wholly owned subsidiary.

As part of the deal, Rolls-Royce would integrate its Bergen diesel and gas engines line with Tognum, a person familiar with the negotiations said. Spokespeople for the companies declined to comment beyond the statement.

Source: Automotive News Europe, Bloomberg