BERLIN -- Daimler AG and Rolls-Royce Group Plc clinched a 3.4 billion-euro ($4.8 billion) takeover of German engine manufacturer Tognum AG after raising their offer and gaining the support of the company's board.
Tognum board members agreed to tender their combined 5 percent stake after Daimler and Rolls-Royce increased the bid by 8.3 percent to 26 euros a share, the company said. Together with Daimler's 28.4 percent stake, the suitors can complete the deal at the reduced acceptance threshold of 30 percent without the backing of other Tognum shareholders.
Tognum is the world's second-biggest manufacturer of high-speed diesel engines for the marine, energy and defense industries, after Caterpillar Inc.
London-based Rolls-Royce, whose engines power Airbus SAS and Boeing Co. planes, plans to integrate Tognum into its Bergen business, which makes engines for ships and power generators.
"This underlines our commitment to pursue a forward looking and long-term strategy," Daimler CFO Bodo Uebber said in the statement. "We welcome Tognum's pledge to support the offer."
Tognum stock has traded above the initial 24 euro-a-share bid since Daimler and Rolls-Royce made the offer on March 9. Daimler, the world's third-biggest maker of luxury cars, and Rolls-Royce, the second-largest producer of plane engines, had received acceptances for just 0.02 percent of Tognum's shares, excluding Daimler's stake.
The initial offer was conditional on holders of at least 50 percent of the shares accepting the bid. Daimler's stake in Tognum allows it to block efforts by other potential suitors, because shareholders with more than 25 percent of any German company have the power to veto major strategic moves.
Tognum chief executive Volker Heuer, CFO Joachim Coers and board member Rainer Breidenbach together owned 5.3 percent of shares as of the end of 2010.
Daimler and Rolls-Royce extended the acceptance period for their offer until June 1. Daimler, the maker of Mercedes-Benz cars and trucks, sold Tognum, then called MTU Friedrichshafen, for 1.6 billion euros to Stockholm-based private equity firm EQT Partners in March 2006 to help pay for reorganizing Chrysler, when it still owned the U.S. carmaker.
After Tognum's IPO at 24 euros a share, Daimler bought a 22 percent stake for 585 million euros in April 2008, raising the holding to more than 25 percent three months later.