Tognum AG owners holding about 30 percent of the company's shares have rejected Daimler AG and Rolls-Royce Group Plc's joint 24 euros-per-share offer for Tognum as too low, a person familiar with the situation said.
Investors, including ING Groep NV, First Eagle Investment Management and Delta Lloyd Asset Management, have written to Tognum opposing the bid, while others have expressed their objections orally, the person said, speaking on condition of anonymity, because the communication is private.
ING and First Eagle are Tognum's biggest shareholders after Daimler, holding more than 12 percent of the shares combined, according to data compiled by Bloomberg. Daimler, which owns 28.4 percent, is sticking to the 3.2 billion-euro ($4.6 billion) bid, spokesman Florian Martens said by phone today from Stuttgart, Germany. "We have time."
Daimler and Rolls-Royce Group Plc started their public tender for the German engine manufacturer on April 6, pressing ahead even though the stock has been above the bid since March 9, when Tognum said it hadn't agreed on a price. The prospective buyers are seeking more than 50 percent of the shares in the tender, which runs until May 18. Daimler has pledged its stake.
Tognum rose as much as 0.1 percent to 25.78 euros and traded at that level as of 10:13 a.m. in Frankfurt, valuing the company at 3.38 billion euros. The bid is 30 percent higher than Tognum's March 4 closing price, the last trading day before the prospective buyers expressed interest.
Daimler, the maker of Mercedes-Benz cars and trucks, and London-based Rolls-Royce, whose engines power Airbus SAS and Boeing Co. planes, aim to hold firm with their offer. Daimler's stake allows it to block efforts by other potential suitors. Shareholders with more than 25 percent of any German company have the power to veto major strategic moves.
Tognum spokeswoman Julia Loeffelsend said the company is reviewing the offer and will comment "in due course," declining to say anything more. Tognum's management holds 5.3 percent of the company's shares.
Gaining control of Tognum, which Daimler once owned, 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. Rolls-Royce plans to integrate its Bergen business, which makes gasoline and diesel engines for ships and power generators, with Tognum after the deal.
Daimler sold Tognum, then called MTU Friedrichshafen, for 1.6 billion euros to Stockholm-based private equity firm EQT Partners to help pay for reorganizing Chrysler in March 2006, when it still owned the U.S. carmaker.
After an initial public offering by Tognum at 24 euros a share in July 2007, Daimler bought a 22 percent stake for 585 million euros in April 2008, increasing the holding to more than 25 percent three months later.