DaimlerChrysler has entered into a definitive acquisition agreement to acquire 100% of Detroit Diesel Corporation (DDC). DaimlerChrysler currently owns 21.3%, of the manufacturer of diesel engines for on-highway, off-highway and automotive applications.
The transaction will be accomplished by a cash tender offer by DaimlerChrysler at $23 per share. The agreed purchase price for the outstanding 78.7% of DDC amounts to approximately $423 Million. Penske Corporation, Detroit Diesel’s major shareholder owns 48,6% of the outstanding shares, has agreed to tender its shares in the offer. The acquisition includes all on-highway, off-highway, automotive and parts and remanufacturing activities of DDC.
The MTU-Friedrichshafen (MTU-F), DaimlerChrysler off-road diesel engine manufacturer who also have a long standing relationship with DDC, in developing and distributing engines, will also benefit from this new entity. MTU-F and DDC currently sell each other’s engines in their respective geographical regions and have jointly developed the 2000 and 4000 series diesel engines.
The on- and off-highway engine businesses of the PTU (Powertrain Unit of DaimlerChrysler), DDC and MTU-F will be integrated worldwide under the umbrella of the Commercial Vehicles Division of DaimlerChrysler. This new business unit will represent a total component business volume of approximately $7 billion per annum.
The current DDC brand named products will continue to be offered broadly in the world marketplace.
As part of the proposed acquisition, DaimlerChrysler acquires Detroit Diesel’s headquarters and engine plant in Redford, MI, as well as other operations across the globe. Across the globe, Detroit Diesel sold nearly 167,000 units in 1999, with revenues of $2.359 billion.
The proposed acquisition is subject to customary conditions, including approval by the governmental authorities of the US, and the European Union. It is anticipated that the transaction (which will include a merger to ensure 100% ownership of DDC) will be completed by the fall of 2000.