Automotive entrepeneur Roger Penske took over Detroit Diesel from General Motors when, in his words, 'There were large losses, morale was poor and on-highway market penetration had declined to 3 percent.'
Now Penske is selling out, as DaimlerChrysler strengthens its commercial vehicle division. DaimlerChrysler will raise its 21.3 percent stake to 100 percent for $423 million. Penske's closely held Penske Corp. now controls 49 percent of the outstanding shares.
Detroit Diesel was attractive not only for the volume of engines it produces but also for the technology it owns, said Dieter Zetsche, DaimlerChrysler's commercial vehicle chief. Diesel engine makers are under increasing pressure to reduce emissions. 'DaimlerChrysler is getting a pretty damn good deal,' said diesel engine analyst Lisa Shallett, with Sanford Bernstein & Co. Inc. in New York.
The deal includes Penske and his management team , who will stay with the company. it also includes Detroit Diesel's Redford, Michigan, headquarters and a manufacturing plant in the same city. Last year, Detroit Diesel sold 167,000 engines, generating $2.4 billion in revenue. The move followed DaimlerChrysler's purchase of a small Canadian truckmaker, Western Star Trucks Holdings Ltd., for $454 million. DaimlerChrysler's commercial vehicle division last year accounted for 10 percent of the company's operating profits of $11.1 billion.