Deutz, Daimler engine deal is done

The comprehensive engine development agreement announced earlier this year between German engine manufacturer Deutz and Daimler Truck AG has been approved by regulatory authorities and has now closed.

Deutz and Daimler Truck have completed an engine development agreement through which Deutz will assemble, manufacture and distribute Daimler engines such as the Heavy-Duty Engine Platform (HDEP) diesels. (Photo: Daimler Truck)

Through the transaction, Deutz will work with Daimler on the development of both Daimler Truck’s Medium-Duty Engine Generation (MDEG series) engines, which are suitable for use in applications such as construction equipment, and Daimler’s Heavy-Duty Engine Platform (HDEP series) diesels, which can be used to power heavy equipment such as agricultural machinery.

“The cooperation with Daimler Truck significantly improves our starting position in a consolidating market as we will gain access to technologically advanced engines and will be able to attract new customer groups at the same time,” said Deutz CEO Dr. Sebastian C. Schulte. “Incidentally, we are delighted to welcome Daimler Truck as a new shareholder, which reflects our strong position in the impending consolidation of the engine market.”

Through the agreement, Deutz is acquiring the intellectual property for the Daimler engines by the end of the decade. The agreement also covers further development of the engines, while Deutz will also independently distribute those same engines.

The medium-duty engines will be produced completely by Deutz, while the heavy-duty versions will be manufactured by Daimler Truck and shipped to Deutz for final assembly. The engines to be marketed by Deutz are scheduled to enter production in 2028.

For the acquisition of the on-highway intellectual property for the medium-duty engines, Daimler Truck received approximately 5.285 million new no-par-value bearer shares by way of a capital increase in kind. As a result, Daimler Truck now holds 4.19% of the issued capital of Deutz.

The agreement follows the strategic goals of each company. Daimler has announced its plans to discontinue investment in engines, instead focusing on zero-carbon technologies such as electrification and fuel cells. Deutz meanwhile aims to position itself as one of the top three engine manufacturers globally, while also working to develop a climate-neutral product portfolio.