This combines products under the MTU-Friedrichshafen, Mercedes-Benz and Detroit Diesel names into one organization.
DaimlerChrysler already owns 21.3% of Detroit Diesel Corp. The acquisition is to be completed 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 Corp., 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.
Roger Penske will stay on as chairman. “The management team of DDC, including myself, remain committed to DDC and its continued success,” he is quoted in the announcement, made yesterday.
Detroit Diesel’s engine range includes the Series 60, which has been the top-selling over-the-road heavy-duty truck diesel, with 550,000 in operation in North America. Additionally, several years ago DDC acquired VM Motori in Italy and has been successfully selling these engines around the world, most recently powering a special Hyundai range of trucks manufactured with North American drivetrains and carrying a Bering badge.
Detroit Diesel has also jointly developed the 2000 and 4000 series of heavy engines for marine and stationary power in conjunction with MTU-Friedrichshafen. These are now becoming more familiar to North American big-engine customers and are making a major contribution to DDC’s finances, in the first quarter of 2000 offsetting a general decline in engine sales caused by a softening of the North American truck market, widely predicted to be off by 15% to 20% for the year. MTU-F is a subsidiary of DaimlerChrysler in its Powertrain Unit.
Adding these volumes, Detroit Diesel worldwide sales for last year were close to 167,000 engines. Adding this volume to DaimlerChrysler’s makes the company the biggest diesel engine manufacturer in the world.
As well as the MTU engines, DaimlerChrysler has its wide range of commercial-vehicle diesels. Freightliner -- also a DaimlerChrysler subsidiary -- announced last year that it would offer the new 900 Series medium-duty diesels in its Business Class, Sterling Acterra and Custom
Chassis models. Additionally, the company will be offering the 12.8-liter 4000 Series, a new in-line six cylinder from the same family as the 12-liter and 16-liter V6 and V8 engines used in Mercedes-Benz heavy trucks around the world.
Automotive entrepreneur Roger Penske originally acquired his 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.
It is anticipated that the transaction will be completed by the fall of 2000.