Mercedes Benz Group AG (MBGAF)

[TPX]

Beijing Auto Buys Stake in Daimler, Deepening Their Alliance

July 23, 2019

SHANGHAI — Beijing Automotive Group said on Tuesday that it would acquire a 5 percent stake in Daimler, deepening the German automaker’s ties to a vast but troubled car market.

The Beijing-based company said it would acquire shares and voting rights equal to a 5 percent stake. The two companies are already partners in China, where foreign automakers have long been required to strike comprehensive joint ventures with Chinese firms in order to make cars there.

Neither company immediately disclosed a transaction value. Based on Daimler’s current market capitalization, a 5 percent stake would be valued at roughly $2.8 billion.

Daimler, which makes Mercedes-Benz cars and other vehicles, said it welcomed the investment, which it said would reinforce their partnership. Daimler already owns a nearly 10 percent stake in Beijing Auto’s publicly listed unit, BAIC Motor.

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“The Chinese market is and remains a crucial pillar of our success — not only for sales, but also for our product development and production,” Ola Källenius, Daimler’s chief executive, said in a statement.

China has become an important market for Daimler, accounting for 12 percent of its sales last year. More than one in four new Mercedes-Benz-branded cars are sold in China. Its ties to China tightened further early last year, when Li Shufu, the auto tycoon who leads Geely Auto of China, bought a nearly 10 percent stake.

Daimler’s China sales rose 5 percent last year over 2017, but a shadow hangs over the broader market. Car sales in China have plunged in recent months as consumers have shown signs of nervousness over slowing economic growth, as well as confusion over new emissions rules there.

https://www.nytimes.com/2019/07/23/business/daimler-beijing-auto-baic-china.html