China’s BAIC to double stake in Daimler, win a board seat and unseat Geely as top shareholder – report

Daimler’s joint venture partner in China is the BAIC Group. Daimler’s biggest shareholder is a Chinese carmaker. However, that Chinese carmaker is not BAIC but Geely. BAIC sees this as a sore point and is looking to remedy the situation by doubling its stake in the Mercedes-Benz maker to around 10%, according to a Reuters report quoting two sources.

The state-owned Beijing Automobile Group (BAIC) is also aiming for a board seat at Daimler, which Geely – currently holding 9.69% of the German company – does not have. The report says that BAIC, which at present holds a 5% stake that it bought in July, has started buying more Daimler shares from the open market. Should it achieve 10%, BAIC would surpass Geely and become Daimler’s largest shareholder.

Daimler said in a stock market filing last month that HSBC held 5.23% in Daimler’s voting rights directly as well as through instruments such as equity swaps as of November 15. The bank, which advised BAIC on its 5% stake purchase earlier this year, is helping the Chinese carmaker in the new investment, one of the sources told Reuters.

When queried, Daimler said that it has no knowledge of BAIC’s move. Daimler’s China boss Hubertus Troska however said “we welcome long-term investors in Daimler.” Asked about BAIC and Daimler, he added: “We like each other. Let us see how things develop.” Both BAIC and Geely declined to comment.

Daimler AG’s shareholder structure as of October 31, 2019

Here’s the background. BAIC has been Daimler’s long-time partner in China and the JV company (Beijing Benz Automotive) produces Mercedes-Benz models in the world’s biggest car market. Both parties also have plans to produce Mercedes Benz trucks via their commercial vehicle joint venture Foton Daimler Automotive.

All was fine before Geely chairman Li Shufu built a 9.69% stake in Daimler in early 2018. According to the newswire, by using Hong Kong-registered shell companies, derivatives, bank financing and structured share options, Li kept his Daimler plan under wraps until he was able to become Daimler’s single largest shareholder, at one stroke.

Since then, the owner of Volvo has sought to get close to Daimler, and in March, both parties announced the formation of a 50:50 joint venture for the ownership, operation and development of the Smart brand’s family of small urban vehicles. The new JV will see next-gen Smart EVs assembled at a new purpose-built plant in China, with global sales set to commence in 2022. Geely and Daimler are also working on a ride-hailing business together.

If this sounds like a love triangle between two Chinese suitors and the trophy called Daimler in the middle, it probably is.

The post China’s BAIC to double stake in Daimler, win a board seat and unseat Geely as top shareholder – report appeared first on Paul Tan's Automotive News.

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