AutoBeta(AutoBeta.net)07/23 Report--

Today, BAIC officially announced that it had completed the acquisition of a 5% stake in Daimler AG, continuing to consolidate the partnership between the two sides. At the same time, BAIC has also become Daimler's third largest independent shareholder.

The rumor finally came true. As early as early May, Reuters reported that BAIC had sought local government support to acquire a 45 per cent stake in Daimler at a cost of more than 20 billion yuan.

BAIC and Daimler established a partnership as early as 2005, forming a joint venture to introduce Mercedes-Benz-branded cars to be produced and sold in China, with BAIC accounting for 51% of the joint venture and Daimler holding the remaining 49%.

According to BAIC officials, the 5 per cent stake in Daimler includes a direct stake of 2.48 per cent and an additional right to vote equivalent to 2.52 per cent of the shares. This shows that the two sides fully recognize the success of long-term cooperation in the past, attach importance to the common interests of both sides, and are optimistic about the potential for future cooperation. Based on Daimler's closing price on Friday, 5 per cent of the shares correspond to 2.88 billion euros, or 22 billion yuan.

Xu Heyi, chairman of BAIC Group, said: "BAIC and Daimler adhere to the principles of mutual trust and mutual benefit, and have a history of cooperation for more than 10 years with outstanding achievements. It has always been BAIC's wish to deepen the partnership through investment in Daimler. Investing in Daimler will enhance the synergy and support of our management and corporate strategy with Daimler. The partnership between BAIC and Daimler is an excellent example of Sino-German cooperation, as well as a model of cooperation between companies of the two countries. We look forward to working with Daimler to continue the success of our long-standing cooperation. "

It is clear that BAIC's move is to consolidate its position in the joint venture and further bind and deepen its cooperation with Daimler.

Given that China will formally lift the restrictions on foreign equity ratios in passenger cars and no more than two joint ventures in 2022, it is possible for foreign shareholders of the joint venture to seek to increase their shareholdings and regain control. However, for the independent brand of the other side, the decline in shareholding means the loss of the right to speak, and the corresponding profits will be greatly reduced. As we all know, Beijing Mercedes-Benz has always been the profit cow of BAIC.

With the precedent of foreign equity adjustment in brilliance BMW, Daimler is also ready to move. In December 2018, Bloomberg reported that Daimler proposed plans to increase its stake in its joint venture with BAIC from 49% to no less than 65%.

Although BAIC and Daimler jointly issued a statement saying that they are "satisfied with the cooperative relationship between the two sides," Daimler certainly wants to take more control as the market opens up. Until BAIC announced its investment in Daimler AG and completed the acquisition of a 5% stake, it was possible to further bind the partnership between the two sides and maintain the existing cooperation model.

It is worth noting that Zhejiang Geely Holdings Group Co., Ltd., another independent car brand in China, successfully acquired about 9.69% of Daimler's voting stake in February 2018, becoming a major shareholder in Daimler, followed by the introduction of smart's domestic project.

It means that Daimler already has a stake in two major Chinese car companies and is a German company with Chinese capital strength, with Geely as the largest shareholder and BAIC as the third largest shareholder.

In 2018, Beijing Mercedes-Benz sold 485000 passenger cars in China, with a total revenue of about 135.42 billion yuan, an increase of 16.0 percent over the same period last year, accounting for 89.1 percent of Beijing Automobile's total revenue in 2018, and continues to be the revenue pillar of Beijing Automobile. Beijing Mercedes-Benz sold 282000 vehicles in the first half of 2019.

Welcome to subscribe to the WeChat public account "Automotive Industry Focus" to get the first-hand insider information on the automotive industry and talk about things in the automotive circle. Welcome to break the news! WeChat ID autoWechat