Mercedes 2012 Annual Report Download - page 209

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13. Investments accounted for using the equity method
Table  7.30 contains key financial figures of investments
accounted for using the equity method.
Table  7.31 presents summarized IFRS financial information
on investments accounted for using the equity method,
which was the basis for applying the equity method in the
Group’s consolidated financial statements.
EADS. The Group reports its investment in and its proportionate
share in the results of the European Aeronautic Defence and
Space Company EADS N.V. (EADS) in the reconciliation of total
segments’ assets to Group assets and total segments’ EBIT
to Group EBIT, respectively, in the segment reporting. Daimler
includes its investment and its proportionate share in the
results of EADS with a time lag of three months in the consoli-
dated financial statements.
At December 6, 2012, Daimler sold a 7.5% share in EADS by
way of an accelerated book building. The share price was fixed
at €27.23, which reflected the final share price at December 5,
2012 at the Paris Stock exchange. Daimler realized a cash inflow
of approximately €1.7 billion. The sale resulted in a pre-tax
gain of €709 million, included in the equity result. Since the
transaction, Daimler holds a 14.9% equity interest in EADS.
Because of the agreed participation rights on the Supervisory
Board, Daimler may continue to exercise significant influence
on EADS.
In 2007, a subsidiary of Daimler which holds Daimler’s 14.9%
(2011: 22.5%) interest in EADS issued equity interests to
investors in exchange for cash. As a result of this transaction,
the Group reports a non-controlling interest in its consolidated
statement of financial position representing the investor’s
ownership in the consolidated subsidiary that issued the equity
interest. The amount reported as non-controlling interest
reflects the investor’s 50% (2011: 33%) share in the net assets
of that subsidiary.
Engine Holding/Tognum. Daimler AG and Rolls-Royce
Holdings plc (Rolls-Royce) received all the relevant regulatory
approvals for the acquisition of Tognum AG (Tognum) on
August 25, 2011. The public tender offer by Engine Holding GmbH
(Engine Holding) was concluded in September 2011. As of
September 30, 2011, the assets of Engine Holding consisted
almost solely of an equity interest in Tognum of approximately
98%. Through the 50% equity interest in Engine Holding there-
fore, approximately 49% of Tognum’s shares are to be allocated
to Daimler. Before making the voluntary public tender offer
for Tognum together with Rolls-Royce, Daimler held 28.4% of
Tognum’s shares.
Daimler’s participation in the public tender offer by Engine
Holding – with regard to the existing 28.4% equity interest
in Tognum – has been accounted for with no effect on profit
and loss. From an economic perspective, Daimler has trans-
ferred the Tognum shares it already held to Engine Holding
in return for an indirect holding in Tognum of similar nature and
value. With the granting of all regulatory approvals, Daimler
indirectly acquired another 20.5% of Tognum’s shares in the
third quarter of 2011; in this context, Daimler had a cash outflow
of €0.7 billion in the third quarter of 2011.
In the context of this transaction, Rolls-Royce received without
further financial compensation additional rights from Daimler
which led to Engine Holding becoming a subsidiary company
of the Rolls-Royce Group on January 1, 2013, after the control
and profit transfer agreement between Engine Holding and
Tognum came into effect.
In return, Rolls-Royce has granted Daimler the right to exercise
a put option on the shares it holds in Engine Holding at a price
which generally hedges Daimler’s investment in Engine Holding.
Starting on January 1, 2013, the put option has a duration of
six years. Part of the cost for the indirect acquisition of shares
in Tognum, which also includes a premium for the control of
Tognum, has been allocated to this option. The initial measure-
ment of this option resulted in a fair value of €171 million.
The option has been recognized as an asset which is to be mea-
sured at fair value through profit or loss in the following
periods. The carrying amount of this option and future changes
in its fair value are recognized in segment reporting as corpo-
rate items in the reconciliation to Group figures.
On December 31, 2012, the value of this option was €178 million
(2011: €177 million). The change in the fair value of the option
during 2012 resulted in a gain of €1 million (2011: €6 million)
which is recognized in other financial income/expense, net.
In the first half of 2012, the contribution by Rolls-Royce to
Engine Holding of the reciprocating engine business that trades
under the Bergen brand was completed. As compensation
for the 50%-stake, Daimler made a cash contribution of €200
million to Engine Holding.
On September 25, 2012, the dependent company Tognum
and the controlling company Engine Holding concluded
a control and profit transfer agreement, resulting in Tognum
subordinating the management of its company under the
control of Engine Holding and committing to transfer its total
profit to Engine Holding. The obligation to transfer profits is
applicable for the first time for the entire profit of the financial
year 2012, in which the agreement became effective.
On November 15, 2012, Tognum’s shareholders’ meeting
approved the agreement and the approval become legally valid
upon being entered in the commercial register in December
2012. Under the provisions of this agreement outside sharehold-
ers of Tognum can exchange their shares for a cash compen-
sation amounting to €26.46 per Tognum share within an accep-
tance period. Those outside shareholders, who do not wish
to accept this compensation offer, are entitled to a recurring
monetary payment amounting to gross €1.85 per Tognum
share that is due after the Annual General Meeting of Tognum.
A court proceeding (Spruchstellenverfahren) has been initiated
against Engine Holding requesting that the amount offered
as cash compensation and as recurring monetary payment shall
be reviewed by the court.
The squeeze-out procedure initiated in 2011 has not been
finally decided upon.