Penske Corporation Announces Sale of Its Detroit Diesel
Stake to DaimlerChrysler
DETROIT, July 20 Penske Corporation (Penske) today
announced that its publicly held affiliate, Detroit Diesel Corporation (DDC),
has signed a definitive merger agreement with DaimlerChrysler North America
Holding Corporation (DCNA), a wholly-owned subsidiary of DaimlerChrysler AG
(DCAG). Under the terms of the agreement, DCNA, which currently owns 21.3% of
DDC, will commence a cash tender offer for the remaining 78.7% of DDC at a
price of $23 per share. Penske, which owns 48.6% of DDC, has committed to
tender its shares to DCNA.
The agreement, which is subject to customary conditions, provides for the
merger of a subsidiary of DaimlerChrysler into DDC following the completion of
the tender offer. The board of directors of DDC has approved the tender offer
and the merger.
Penske originally acquired its stake in DDC beginning in 1988 under a
joint-venture agreement with General Motors, and DDC became a public company
in October, 1993. Since 1988, when it commenced operations, DDC has grown
revenues nearly four-fold to $2.36 billion and expanded into automotive diesel
engines, remanufacturing and related distribution businesses. DDC's Series 60
engine is also the leading, on-highway heavy-duty engine in North America with
over 550,000 units in operation.
Roger S. Penske, Chairman, said, "Detroit Diesel is one of the most
challenging opportunities we have undertaken. I am extremely proud of what
the DDC team has built. Before we formed the Company, there were large
losses, morale was poor, and on-highway market penetration had declined to 3%.
Through hard work, the DDC team restored Detroit Diesel's leadership position
in the industry."
Mr. Penske continued, "We believe the merger with DaimlerChrysler will
allow DDC to achieve its full potential. The industry is going through a
major consolidation, and this alignment with a world-class company like
DaimlerChrysler assures continued growth for Detroit Diesel with bright
prospects for its employees and customers."
The transaction is subject to customary regulatory approval. It is
anticipated that the transaction will be completed by the fall of 2000.
Detroit Diesel Corporation is engaged in the design, manufacture, sale and
service of heavy-duty diesel and alternative fuel engines, automotive diesel
engines, and engine-related products. The company offers a complete line of
diesel engines from 22 to 10,000 horsepower for the on-highway, off-road, and
automotive markets. Detroit Diesel services these markets directly and
through a worldwide network of more than 2,800 authorized distributor and
dealer locations. DDC is a QS-9000 certified company.
Detroit Diesel's major shareholder is Penske Corporation, a closely-held,
diversified transportation services company whose operations include Penske
Truck Leasing Company, Diesel Technology Company, Penske Automotive Group,
Inc., Penske Auto Centers, Inc., and Penske Capital Partners, L.L.C. Penske
Corporation and its subsidiaries manage and operate businesses with annual
revenues of nearly $11 billion and employ more than 34,000 people around the