PRIVATE equity fund group EQT is to buy the Off-Highway business of DaimlerChrysler AG, including rail, marine and military diesel engine maker MTU Friedrichshafen GmbH. The companies have agreed an enterprise value of €1·6bn, and DaimlerChrysler will receive a cash inflow of €1bn.
The Off-Highway business has annual sales of around €1·7bn and over 6700 employees. The sale agreement was signed on December 28 and the transaction will be completed in the first quarter of this year, subject to regulatory approval.
DaimlerChrysler acquired the remaining Brandestein-Zeppelin and Maybach family-owned shares in MTU Friedrichshafen during September, then initiated the sale of the Off-Highway business in a strategy to focus on the automotive sector. According to MTU Friedrichshafen President Volker Heuer, a review in 2005 indicated the Off-Highway business ’can survive only through future growth’, but DaimlerChrysler ’was no longer willing to provide the additional required capital’ for a non-core activity.
’With the sale to EQT we are putting MTU Friedrichshafen on the right track for continued expansion’, said Dr Rüdiger Grube, Chairman of the supervisory board of MTU Friedrichshafen. Bids were also received from MAN and jointly from Kohlberg Kravis Roberts & Co and Dubai International Capital. ’As the prices under discussion with the three bidders were very similar, we decided in favour of the bidder with the most convincing concept’, said Grube.
EQT is backed by the Wallenberg family, which has interests in ABB, Atlas Copco, Saab and Scania. EQT intends to take a long-term approach, with ’substantial increases in the budgets for fixed asset investment and R&D’, according to Heuer. n
