Rolls-Royce, Daimler woo Tognum investors with dividend

FRANKFURT (Reuters) – Daimler (DAIGn.DE: Quote, Profile, Research) and Rolls-Royce (RR.L: Quote, Profile, Research) tried to woo Tognum (TGMG.DE: Quote, Profile, Research) shareholders by offering them a dividend on top of their bid valuing the diesel engine maker at 3.2 billion euro ($4.6 billion).

The German carmaker and British engine maker Rolls-Royce are offering 24 euros per share to buy at least half of Tognum, a price that the target company has said is too low.

On Wednesday, the bidders said that shareholders who tender their Tognum stock will also be entitled to a proposed 0.50 euro-per-share dividend for 2010, adding as much as 65 million euros to the deal’s value.

Tognum shares were little changed around 25.55 euros at 0921 GMT, still above the offer price, indicating investors have not yet given up on a better deal.

ING Groep (ING.AS: Quote, Profile, Research), which holds 9 percent of Tognum shares, said this week it would be “extremely disappointed” if the diesel engine maker’s management recommended that investors accept the offer.

The Dutch bank said it sees Tognum’s fair value, including a portion of expected synergies from a tie-up, at 30 to 32 euros per share. Daimler had said in response it did not intend to pay more than 24 euros per share.

Shareholders of Tognum, which makes specialty engines, can tender their shares as of Wednesday and until May 18.

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.

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 Josie Cox; Writing by Maria Sheahan; Editing by Hans Peters)

($1=.7050 Euro)

Rolls-Royce, Daimler woo Tognum investors with dividend