Power systems provider Rolls-Royce Group and car maker Daimler launched their EUR 3.2 billion public tender to buy German diesel engine maker Tognum, on Wednesday, Wall Street Journal informs. However, they failed to raise their initial offer, which will disappoint shareholders who have been holding out for a higher price.
The two companies are offering EUR 24 per share for Tognum, a 30% premium to the closing price of Tognum’s shares March 4, the last undisturbed trading day before rumors of an offer emerged. Shareholders, who previously have said the offer undervalued the company, its order book and prospects, expected more. The stock has traded above the offer price since March 8, and closed Tuesday in Frankfurt at EUR 25.57, giving it a market capitalization of EUR 3.36 billion. ING Investment Management, which owns shares in Tognum, in a letter to the company’s board last month said that the EUR 24 offer price was equal to its valuation at its initial public offering in 2007. It suggested a valuation of EUR 30 to EUR 32 a share, which would value Tognum at between EUR 3.9 billion and EUR 4.2 billion.