Investment

BAIC to acquire a $2.8 billion Daimler take to boost alliance

Bloomberg/Krisztian Bocsi

  • share this article

The transaction might pave the way towards Daimler lifting its stake in the joint venture in China after restrictions for foreign investors in the world’s largest auto market eased.

Wednesday 24, July 2019

Daimler’s Chinese partner Beijing Automotive Group Company (BAIC) is buying a five per cent stake in the Mercedes-Benz maker to cement industrial ties between the two automotive companies, reported Bloomberg.

Daimler stated that BAIC, backed by the Beijing municipal government, has acquired 2.48 per cent holding and the right to buy an additional 2.52 per cent stake.

The stakes have a combined valuation of EUR 2.5 billion ($2.8 billion). Together with Daimler’s biggest shareholder—Zhejiang Geely Holding Group Company’s billionaire owner Li Shufu—the transactions will take the level of Chinese ownership in the world’s biggest luxury carmaker to 14.7 per cent.

However, a state-backed Chinese shareholder at one of Germany’s industrial icons could stir concerns about influence amid a raging trade war. China and the US are the two largest markets for Daimler’s main Mercedes-Benz cars unit, the world’s bestselling luxury-car maker.

Maintaining ties with Daimler is strategically important for BAIC, as its joint venture with Hyundai Motor Company has been struggling and its own domestic brands are burning cash as the trade spat with the US is weighing on demand for new vehicles.

Since 2005, BAIC and Daimler have set up a number of cooperations in China, including the joint venture Beijing Benz Automotive Company that produces premium cars in the world’s biggest car market.

TAGS : Beijing Automotive Group Company, Mercedes-Benz, Daimler, Zhejiang Geely Holding, US-China Trade tension

print this article