Swedish buyout firm EQT is poised to buy DaimlerChrysler's diesel motor unit MTU Friedrichshafen, Reuters reported yesterday.

MTU makes engines for ships, locomotives, power plants, heavy vehicles and tanks.Sources have estimated that the sale could fetch DaimlerChrysler more than €1.5bn (£1bn).

Kohlberg Kravis Roberts and Dubai International Capital had been the front-runners to clinch the deal for about €1.7bn. German truckmaker MAN was the favourite of MTU staff, who feared a financial buyer might break up the business. DaimlerChrysler and EQT declined to comment.