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BAIC takes stake in Daimler
Posted on Tuesday, 23 July 2019 10:47
Beijing Automotive Group (BAIC) has bought a 2.5 per cent stake in Daimler and obtained the right to acquire an additional 2.5 per cent in a deal that makes the state-owned enterprise the third largest shareholder in the German car manufacturer.
The two are already long-term partners and the investment adds a cross-shareholding dynamic to the mixture: some six years ago, the European automobile maker bought an equity interest in the listed arm of the state-owned enterprise.
Daimler currently owns 9.5 per cent of BAIC Motor and holds 3.0 per cent of BAIC BluePark New Energy Technology, a manufacturer of electric vehicles for the Chinese market.
The cars sold in the country under the Mercedes-Benz brand are either produced via a BAIC joint venture formed in 2005 or by a Fujian province-based entity, in which the Chinese partners owns a 35.0 per cent stake.
BAIC, through wholly-owned subsidiary Investment Global, will be the third-largest shareholder: Zhejiang Geely Holding’s Li Shufu, via Tenaciou Prospect Investment, is currently the biggest backer, followed by Kuwait’s Sovereign Savings Fund.
The initial 2.5 per cent stake is currently worth roughly EUR 1.22 billion in the markets, based on a capitalisation of EUR 49.14 billion at the time of writing.
At this estimated valuation, the deal will be one of the ten largest targeting the global motor vehicle, body and trailers and parts manufacturing sectors.
Bloomberg noted the cross-shareholding could signal the possibility of Daimler increasing its participation in its mainland-based joint venture now the government has lifted restrictions capping foreign investment in the automotive industry.
However, the news provider added such a move would be red-flagged against the backdrop of the US and China trade tensions and also on concerns of a state-owned giant holding a significant stake in one of German’s iconic car makers.
© Zephus Ltd