Chinese Car Maker Buys Into Daimler -- WSJ
July 24 2019 - 3:02AM
Dow Jones News
By William Boston
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (July 24, 2019).
BERLIN -- State-owned Beijing Automotive Group Ltd. said it has
acquired a small stake in joint-venture partner Daimler AG,
boosting Chinese ownership of the German auto maker to around
15%.
The Chinese company said Tuesday that the acquisition of a 2.48%
stake, with an option to raise it to 5%, would strengthen the two
car makers' longstanding alliance in China known as Beijing Benz
Automotive Group Co.
At the same time, the move could aggravate worries in Europe
about Chinese penetration of core industries in the region. Chinese
billionaire Li Shufu already owns 9.7% of Daimler through Zhejiang
Geely Holding Group, which owns Swedish auto maker Volvo Cars.
"In our view this partnership is exemplary for the successful
cooperation between a Chinese and German company," Beijing
Automotive Chairman Heyi Xu said. "It can serve as a model for
other companies from both countries."
Daimler's closer ties with China could also irritate the Trump
administration, which is pressuring Beijing over trade issues,
including increased market access. Daimler and other German auto
makers have faced the prospect of higher U.S. tariffs, though the
threat has abated in recent months.
Under rules adopted last year, Berlin can veto any acquisition
by a non-European buyer of a more than 10% stake in a German
company across sectors ranging from energy to telecommunications,
technology, defense, finance, transportation and the media.
The government followed up in February by saying it would
prepare legislation allowing it to take significant stakes in
German companies to protect them from foreign takeovers.
Germany's global car makers, which also include Volkswagen AG
and BMW AG, are among the country's flagship companies. But all
have suffered lately amid slowing global and domestic demand, the
reputational fallout from a four-year-old diesel emission scandal,
and high costs associated with the industry's shift to electric
vehicles.
Daimler Chief Executive Ola Källenius welcomed the investment by
Beijing Automotive.
"This step solidifies our successful partnership," he said. "The
Chinese market is and remains a decisive pillar of our success --
not only in terms of revenue but also for our development and
production."
With the investment, Beijing Automotive becomes Daimler's
third-largest individual shareholder after Mr. Li's Geely Holding
Group and the Kuwaiti Investment Authority, which holds a 6.8%
stake.
Daimler shares rose 4.9% to EUR48.05 on Tuesday.
Daimler unsettled markets about two weeks ago with its second
profit warning in a month, blaming higher-than-expected costs
related to a recall of Takata air bags and proceedings related to
its diesel vehicles.
The Stuttgart-based auto maker also reported a EUR3.1 billion
($3.48 billion) charge for the second quarter, leading to a
quarterly loss before interest and taxes of EUR1.6 billion. Its
full second-quarter results are due out Wednesday.
BAIC, with annual revenue of around EUR62 billion, holds a 51%
stake in the Beijing Benz venture, while Daimler holds the
remaining shares. It acquired the 2.48% stake in Daimler through
its investment company, Investment Global Co.
Write to William Boston at william.boston@wsj.com
(END) Dow Jones Newswires
July 24, 2019 02:47 ET (06:47 GMT)
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