Sweden’s Volvo increases stake in German diesel engine maker Deutz to 25%

Swedish industrial group AB Volvo (STO:VOLVA; VOLVB) said Wednesday it had agreed to raise its stake in German diesel engine producer Deutz AG (ETR:DEZ) to over 25% from 6.7% through the acquisition of 22m shares for EUR5.88 (USD7.36) apiece.

The agreed price represents a premium of 12% over Deutz’ average price in the last three months. The transaction, subject to certain conditions and regulatory approval, will make the Swedish company Deutz biggest shareholder. It is due to close in the third quarter of the year without any impact on Volvo’s financial results.

This move will help Volvo to widen its cooperation with Deutz in the medium-duty engines, Volvo’s chief executive Olof Persson said. Earlier in 2012, the two companies inked a memorandum of understanding to study a potential expansion of their long-term partnership and develop the next generation of medium-duty engines for off-road applications. The MoU also envisages the possible set-up of a Chinese joint venture to manufacture medium-duty engines.

Volvo currently holds 8.097m shares in Deutz.

Koeln-based Deutz is active in the design and production of diesel engines for both on-road and off-road applications. It runs production sites, 10 distribution companies, nine sales offices and has more than 800 partners in over 130 countries worldwide.

Volvo supplies commercial transport solutions, including trucks, buses, construction equipment, engines and drive systems for boats and industrial applications, industrial engines and systems, industrial IT solutions, logistics solutions, aircraft engine components, as well as services and support. It has production facilities in 20 countries and sales facilities in over 190 markets.

AIG’s German arm increases offer for property firm AIRE

AIG Century GmbH & Co KGaA, part of US insurance major American International Group Inc (NYSE:AIG), said on Friday it had increased its voluntary offer to take full control of German real estate investor AIRE GmbH & Co. KGaA (FRA:ARE) to EUR18.25 (USD23.20) a share from EUR17.00.

AIG Century, which held 7.56% in AIRE before announcing plans to launch its EUR17.00 per share buyout offer on 30 April, said today it had struck agreements with more of the target’s shareholders and secured about 69.5% in AIRE.

By 30 April, the buyer had received commitments from AIRE shareholders, which together with its own stake in the target firm brought its total ownership level to around 31.8%.

The revised price is a premium of 35.69% to AIRE’s closing on 27 April, the last trading day before the offer was announced, and 87.4% above its estimated volume weighted average price for the six months to 27 April.

AIG Century said it would publish the final terms of the buyout offer in the offer document as soon as it receives clearance from the German Federal Financial Supervisory Authority.

The acceptance period will start after that approval is secured.

E.ON sells gas grid to a Macquarie-led consortium for €3.2bn

German utility E.ON AG (ETR:EOAN) said it had agreed to sell its gas grid in Germany Open Grid Europe (OGE) to a consortium of Macquarie European Infrastructure Fund 4, Infinity Investments, British Columbia Investment Management Corp and Meag Munich Ergo for around EUR3.2bn (USD4bn).

E.ON said it would use the proceeds from this divestment to cut debt and invest in growth operations.

The group, which aims to raise some EUR15bn from disposals by 2013, said the sale of OGE brought it closer to that target. So far E.ON has sold assets worth over EUR12bn, it said.

OGE, the former gas transmission division of E.ON Ruhrgas AG, has been separated from the parent company in 2010 and established as an independent transmission operator in line with the European Union (EU) norms.

Now the firm operates the largest gas transmission system in Germany, serving as a key centre in Europe for shipments of bulk gas from Russia and Norway.

The Macquarie European Infrastructure Fund 4 of Australian banking group Macquarie Group Ltd (ASX:MQG) headed the buying consortium. Edward Beckley, head of Macquarie Infrastructure and Real Assets in Europe, commented that OGE was a very well run firm in a stable and regulated environment.

According to unnamed sources cited by Bloomberg, the buyers had resorted to nine banks to underwrite loans of over EUR2bn to help finance the deal.

E.ON said it expected to wrap up the sale in the third quarter of this year, pending clearance from the German Federal Cartel Office and the German Federal Ministry of Economics and Technology.

German Fresenius to raise €1bn via share issue to fund Rhoen-Klinikum buy

German healthcare group Fresenius SE & Co KGaA (ETR:FRE) said its management and supervisory boards had decided to raise about EUR1bn (USD1.3bn) via the placement of 13.8m new shares with institutional investors to help finance its planned EUR3.1bn buy of domestic hospital operator Rhoen-Klinikum AG (ETR:RHK).

The Else Kroner-Fresenius-Foundation will participate in the capital hike with at least EUR90m, Fresenius said.

The accelerated bookbuilt is being run by Deutsche Bank AG (ETR:DBK), JPMorgan Chase & Co (NYSE:JPM) and Societe Generale SA (EPA:GLE).
Fresenius announced on 26 April plans to launch a EUR22.50 a share voluntary public takeover offer in cash for Rhoen-Klinikum in a move to boost its hospital business.

It said then it would finance the deal with a syndicated loan, a bond issue and equity instruments.

The deal will combine Fresenius’ Helios with Rhoen-Klinikum to create the largest private hospital operator in Germany with around EUR6bn in annual revenues and significant cost and growth synergies, the buyer said.

The offer is subject to an acceptance level of 90% and regulatory clearance.

The buyer said it would publish the detailed offer documents in the second half of May, with the hope of closing the transaction in the third quarter of 2012.

Rhoen-Klinikum, running 53 hospitals and 39 healthcare centres, reported EUR2.6bn in sales and a net income of EUR161m last year.

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