Daimler rebuffs Geely offer to buy stake
Julie Zhu Norihiko Shirouzu
By and HONG KONG/ BEIJING: Daimler AG has turned down an offer from China’s Geely to take a stake of up to five percent via a discounted share placement, as the German carmaker has long been reluctant to see existing shareholdings diluted, sources with knowledge of the talks said.
A stake of that size would be worth US$ 4.5 billion ( RM18.9 billion) at current market prices. Although Daimler declined the offer, it told Geely it was welcome to buy shares in the open market, the sources added.
Carmakers in China have embarked on a flurry of dealmaking, as they scramble to boost production of electric and plug-in hybrid vehicles ahead of tough new quotas to be imposed by Beijing, which wants to reduce urban smog and lower the country’s reliance on oil.
People with knowledge of Geely’s thinking said the company was keen to access Daimler’s electric car battery technology and wanted to establish an electric car joint venture in Wuhan, the capital of Hubei province. Geely, which also owns Swedish car maker
The company is very happy with our shareholder structure at present but would welcome new investors with a long-term interest in the company.
Volvo, is still hopeful it can secure a deal in some form over the coming weeks, they added.
The two carmakers met in Beijing in recent weeks at Geely’s behest. There, the Chinese firm, formally known as Zhejiang Geely Holding Group, offered to take a stake of between three and five per cent if Daimler would issue new shares at a discount, the sources said.
It was not immediately clear what kind of discount for the shares Geely had in mind or whether Geely was interested in buying the shares on the open market.
A spokesman for Geely declined to comment. A spokesman for Daimler said the company was “very happy with our shareholder structure at present”, but added that it would welcome new investors with a long-term interest in the company.
Geely, which has a market value of some US$ 32 billion ( RM134.4 billion), is the leading domestic brand in China with a five per cent market share, according to an analysis by Nomura Securities.
A stake of five per cent would establish it as Daimler’s thirdlargest shareholder behind the Kuwait Investment Authority and BlackRock, who hold 6.8 per cent and 6.0 per cent respectively, according to Reuters data.
Daimler, however, has a longestablished joint venture with Chinese carmaker BAIC Motor Corp, which its spokesman described as “our most important partner in China.” This month it announced plans to invest at least five billion yuan ( RM3.18 billion) in electric battery and vehicle production with BAIC in China. It also has another tie-up with BYD, a Chinese carmaker backed by Warren Buffett.
The maker of Mercedes-Benz cars has previously held similar discussions about an investment from BAIC. But Daimler has consistently refused to issue new shares out of concern for existing shareholders.
Other recent potential deals involving global and Chinese carmakers include Ford Motor Co’s announcement in August that it is looking at setting up an electric car venture with Chinese firm Zotye Automobile Co Ltd.
Any deal involving an equity stake in Daimler would be Geely’s largest since it bought Volvo for US$ 1.8 billion in 2010. This week, Geely and Volvo launched the first car in China under their new brand, Lynk & Co, which the Chinese group intends to eventually take global. — Reuters
Daimler, spokesman