DaimlerChrysler Agrees to Acquire 100% of Detroit Diesel's Stock
20 July 2000
Acquisition from Penske Corp will create the leading manufacturer of heavy and medium-duty on-highway Diesel engines
STUTTGART, Germany and REDFORD, Mich. - DaimlerChrysler AG announced today
that it has entered into a definitive acquisition agreement to acquire 100% of
Detroit Diesel Corporation. DaimlerChrysler currently owns 21.3% of this l
eading 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, and 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.
"With the acquisition of this highly respected and internationally
recognized diesel engine manufacturer, DaimlerChrysler has further enhanced
and consolidated its global market position. While acknowledged as the number
one commercial vehicle producer worldwide, we are also now the new lead
manufacturer of heavy and medium duty on-highway diesel engines in the world,"
said Juergen Schrempp, Chairman of DaimlerChrysler.
"In the worldwide truck market, the engine is one of the most important
competitive elements in terms of customers' economic requirements in order to
meet emission standards. Therefore, this step continues DaimlerChrysler's
strategy of building its worldwide leadership in diesel engines and enables us
to offer an integrated truck product in every major market across the globe,"
added Dieter Zetsche, board member of DaimlerChrysler responsible for
commercial vehicles.
Due to the strong loyalty of U.S. truck customers to engine brands, this
acquisition provides significant advantages by combining DDC-engines with
Mercedes-Benz diesel engines. The MTU-Friedrichshafen DaimlerChrysler off-road
diesel engine manufacturer who also has 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 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, and will result in DaimlerChrysler
becoming the world's leading manufacturer of diesel engines for medium and
heavy-duty trucks.
The current DDC brand named products will continue to be offered broadly
in the world marketplace.
Roger S. Penske, Chairman, said, "This transaction is an important step in
the continued growth of DDC. As we look at the competitive environment, and
the consolidation activity occurring within our industry, this merger will
provide strength and stability for DDC in the future. The management team of
DDC, including myself, remain committed to DDC and its continued success. We
also see this as a tremendous opportunity for our employees and customers to
be more closely associated with a company as innovative and customer-focused
as DaimlerChrysler."
DaimlerChrysler and Detroit Diesel will benefit from cost savings based on
synergies and economies of scale achieved through further enhanced research
and development, greater purchasing power, increased manufacturing
efficiencies and administrative savings.
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 U.S. 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.
DDC, incorporated in 1987, is an international leader in diesel engines
for on- and off-highway applications. The company offers engines from 22 to
11,000 horsepower for the on-highway, off-road (including power generation)
and automotive markets through a worldwide network of more than 2,700
authorized distributor and dealer locations. It designs, manufactures,
markets, services and provides after market and remanufactured diesel and
alternative fuel engines.
DaimlerChrysler AG is the world's leading manufacturer of commercial
vehicles with the brands Mercedes-Benz, Freightliner, Sterling, Setra and
Thomas Built Buses.