Daimler MTU Heavy Duty Diesel Unit To Be Sold?

FRANKFURT, Dec 4, 2005; Reuters reported that DaimlerChrysler is on the point of selling its heavy diesel engine unit MTU Friedrichshafen to Swedish buyout firm EQT, a source close to the talks said in response to a newspaper article on Sunday.

"EQT is about to have its bid accepted," the source said. "There's no signature but, if nothing changes dramatically, EQT should have the deal in the bag."

DaimlerChryser and EQT declined to comment.

German Sunday newspaper Frankfurt Allgemeine Sonntageszeitung reported earlier that EQT had won the deal to buy MTU, which makes engines for tanks and ships.

Sources had told Reuters earlier in the week that EQT was in exclusive talks with the German automaker, but that exclusive talks with another bidder could not be ruled out in future.

Previously, buyout group Kohlberg Kravis Roberts and partner Dubai International Capital had been seen as frontrunners to buy MTU for around 1.7 billion euros ($2 billion).

German truckmaker MAN was also a finalist in the sales process and was the favourite of MTU staff, who feared a financial buyer would break up MTU.

Financial sources have told Reuters that both EQT and KKR were prepared to invest heavily in growth at MTU.