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DaimlerChrysler to Sell German Diesel-Engine Maker

DaimlerChrysler announced Wednesday that it has reached a deal to sell MTU Friedrichshafen, a German maker of diesel engines, to financial investor EQT.

DaimlerChrysler AG told the Associated Press Wednesday that it is selling diesel-engine maker MTU Friedrichshafen GmbH to financial investor EQT. The move is part of DaimelerChrysler's strategy to focus on its core vehicles business.

In the Associated Press report, DaimlerChrysler said the two sides valued the unit at 1.6 billion euros, or $1.9 billion and that it expected a cash inflow of some 1 billion euros from the sale. It forecast a 300 million euros boost to net profit.

The sale also includes the off-highway activities of Detroit Diesel Corp., according to the report.

In September, DaimlerChrysler bought out the minority shareholders of MTU Friedrichshafen and indicated at that time that it was in talks with several potential buyers.

Friedrichshafen, Germany-based MTU Friedrichshafen builds engines for trains, ships, military vehicles and construction machinery. It had nearly 6,700 employees at the end of last year, most based in Germany.

DaimlerChrysler told the Associated Press that the deal is espected to close in the first quarter of 2006.