Daimler turns down Geely offer to buy stake

Daimler AG has turned down an offer from China’s Geely to take a stake of up to 5 per cent via a discounted share placement, as the German automaker has long been reluctant to see existing shareholdings diluted, sources with knowledge of the talks said.

A stake of that size would be worth $4.5 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 Volvo, is still hopeful it can secure a deal in some form over the coming weeks, they added.

The two automakers 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 3 per cent and 5 per cent if Daimler would issue new shares at a discount, the sources said. Shares in Daimler were up 1 per cent in early Wednesday trade, in line with the broader market. REUTERS