Tognum recommends acceptance of Rolls-Royce and Daimler’s acquisition offer

18 May 2011

The directors of MTU parent Tognum have issued a statement recommending shareholders to accept the latest offer to buy the company made jointly by Daimler and Rolls-Royce.

The statement reads: “The Management Board and Supervisory Board of Tognum AG today submitted their joint statement in accordance with Section 27 of the German Securities Acquisition and Takeover Act (WpÜG) on the increased offer price published on 16 May 2011 by Engine Holding GmbH. Following an in-depth examination, they recommend in their statement that the company’s shareholders accept the tender offer.

“’Together with Daimler and Rolls-Royce, we are going to create a global technology leader in propulsion systems and decentralised energy systems. In doing so, we will further strengthen the Tognum Group’s outstanding market position and substantially improve our prospects for the future’, said Volker Heuer, CEO of Tognum AG. ‘Under the now modified tender offer, our shareholders are set to receive an attractive premium of 41% on the last unaffected price of Tognum shares. The transaction consequently also generates considerable added value for our owners.’

“Tognum is to be the platform for future growth for Daimler and Rolls-Royce in the markets for propulsion systems and decentralised energy systems. In the agreement in principle (sic) between the three companies published in March 2011, Daimler and Rolls-Royce stated their intention to secure Tognum AG’s technological leadership with research and development spending alongside capital expenditure.

“The companies’ product portfolios and market presence in each case attractively complement one another. The move presents new cooperation opportunities notably for Tognum and Rolls-Royce, because in the future between them the two companies will cover the enhanced spectrum of medium and high-speed diesel engines for complete propulsion systems. Moreover, the companies benefit from complementary additions to their energy product portfolios. As they offer different products in similar markets, this would create significant sales and after sales synergies.

“The Tognum Group’s locations worldwide are to be retained. Friedrichshafen remains the headquarters of the company as well as the research, development and production site for propulsion systems and energy systems. The transaction also opens up additional growth opportunities for Tognum in the BRIC countries. The takeover by Rolls-Royce of Tognum’s fuel cell business envisaged in the agreement in principle is the subject of further talks.

“The Management Board and Supervisory Board of Tognum AG discussed today in extraordinary meetings in detail the offer from the bidder featuring a 2.00€ increase in the offer price to 26.00€. Both boards welcome the increase of the offer price and, after appraisal of all relevant circumstances and the improved premiums, consider it now appropriate. This assessment is supported by two independent fairness opinions provided to the Management Board and Supervisory Board from Deutsche Bank and Lazard & Co, which consider the offer price to be appropriate. Both boards therefore unanimously decided to recommend that shareholders of Tognum AG accept the offer.

“In addition, all members of the Management Board and Supervisory Board have stated that they intend to accept the tender offer for the shares they hold.”

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