Daimler to become new key shareholder in Tognum

STUTTGART, GERMANY - Daimler AG aims to acquire EQT’s 22.3% equity interest in Tognum AG and has entered into an agreement in this matter. The proposal on this matter has been approved by the Supervisory Board of Daimler AG today. Thanks to the optimized shareholder structure and the initial public offering in 2007, Tognum AG has become a globally leading producer of off-highway engines with above-average operating margins. As EQT indicated its willingness to sell its stake in Tognum, Daimler will now be able to protect its long-term supply relations with Tognum by taking over this equity interest. The price per share is €20.00. On this basis, the purchase price would be approximately €585 million, making Daimler the largest shareholder in Tognum.

Daimler has also arranged to acquire an additional nearly 1% of the shares in Tognum. In the short to medium term, Daimler aims to acquire a blocking minority stake in Tognum. As a consequence of the equity interest, Daimler will appoint two of the members of the Supervisory Board of Tognum in the future.

The former Daimler AG disposed of its off-highway activities at the end of 2005 because the company then faced numerous operational challenges and was about to consolidate its operations. This led to a focus on the core business, and Daimler therefore did not want to make the substantial investment required to improve Tognum’s competitiveness.

Daimler and Tognum continued their traditionally intensive cooperation also after the sale of Tognum. For example, the Mercedes-Benz plant in Mannheim supplied more than 17,000 diesel engines and the Detroit Diesel Corporation plant in Detroit more than 5,000 diesel engines to Tognum in 2007. They are used for example in agricultural machinery, industrial applications such as cranes, pumps or snow cats, marine applications, as well as in power generation systems. In particular, volumes in the fast-growing worldwide industrial-agricultural market are to be further expanded in the future, thus also making a contribution to the long-term supply with engines from Daimler.

Tognum generates annual revenue of more than €300 million from sales of engines from Daimler and an additional €160 million from sales of drive shafts to Daimler. Furthermore, Daimler and Tognum are currently discussing the possible future supply of Daimler’s new and technologically leading medium-duty engine generation (MDEG) in the power segment below MTU’s future new engine Series 1600.

Tognum today is one of the world’s leading suppliers of off-highway engines whose profitability could be improved significantly in recent years. In 2007, revenue increased by 12% compared with the prior year to €2.8 billion and adjusted EBIT rose by 26% to €390 million. Adjusted return on sales increased to more than 14% in 2007. The transaction is to be completed in the third quarter of 2008 at the latest, after receiving the approval of antitrust and other authorities.