This may be a landmark deal that could pave the way for similar transactions in the future: Daimler AG has become the first non-Chinese company to acquire an interest in a Chinese OEM (Original Equipment Manufacturer).
The parent company of Mercedes-Benz bought a 12-percent stake in long-standing partner BAIC Motor, the passenger car unit of Beijing Automotive Group (BAIC Group), one of the top automotive companies in China.
Daimler and BAIC Motor have been granted approval from Chinese authorities to go ahead with the deal, marking the official closing of the transaction. Daimler’s investment will take place through the issuance of new shares corresponding to a 12 percent stake in BAIC Motor. The move shows the German automaker’s strong support for BAIC Motor’s intention to launch an initial public offering (IPO) in the future.
As part of the agreement, Daimler will have two seats on the Board of Directors of BAIC Motor, to be held by Daimler AG board member for Greater China, Hubertus Troska, and Daimler AG CFO, Bodo Uebber.
Furthermore, BAIC will get a controlling stake (51 percent) in the production joint venture Beijing Benz Automotive Corporation (BBAC). At the same time, Daimler will increase its stake in the integrated sales joint venture Beijing Mercedes-Benz Sales Service Corporation (BMBS) by 1 percent to 51 percent. The latter reunites all sales and service activities for imported and locally produced Mercedes-Benz cars under one roof and is a key pillar for Mercedes-Benz’s sustainable growth in China.
BAIC Group is one of China’s largest automakers, with sales of over 1.7 million vehicles in 2012.
By Dan Mihalascu
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