21 July 2000
Detroit Diesel Corporation (DDC) announced the signing of a definitive merger agreement with a subsidiary of DaimlerChrysler AG (DaimlerChrysler). Under the terms of the merger agreement, DaimlerChrysler, a shareholder of DDC since 1993 that currently owns 21.3% of the outstanding common shares of DDC, will commence a cash tender offer for the remaining 78.7% of DDC at a price of $23.00 per common share for a total transaction value of $423 million. Penske Corporation, which currently owns 48.6% of the outstanding common shares of DDC, has committed to tender its shares to DaimlerChrysler.
The agreement 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.
The proposed acquisition is subject to approval by the antitrust authorities of the US and the European Union. It is anticipated that the transaction will be completed by the Fall of 2000. Roger Penske, DDC chairman and largest shareholder, and other executives will remain with Detroit Diesel.
The proposed acquisition of DDC was announced a day after DaimlerChrysler purchased the Canadian heavy-duty truck maker Western Star Trucks for $456 million.
DDC 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 hp for the on-highway, off-road, and automotive markets.
DaimlerChrysler plans create a new business unit, called Commercial Vehicles Division of DaimlerChrysler, which would include DDC, MTU-Friedrichshafen, and other engine businesses of its powertrain unit. Detroit Diesel is currently a supplier to many of DaimlerChrysler’s vehicle brands, including Mercedes-Benz, Freightliner, Sterling, Setra and Thomas Built Buses, as well as Western Star trucks.
Source: Detroit Diesel Corporation