Geely chairman builds $9bn stake in Germany’s Daimler
Geely chairman builds $9bn stake in Germany’s Daimler
Two sources familiar with the thinking of Li Shufu said his move to accumulate the stake, which has a market value of $9 billion, was motivated by the “dramatic transformation” under way in the automotive industry.
His strategic goal was an alliance with Daimler, which is developing electric and self-driving vehicles, to respond to the challenge from US players Tesla, Google and Uber, who are all working on their own driverless cars.
“This is what Chairman Li has envisioned. He thinks maybe one or two or three manufacturers that exist today will survive in this new competition,” one of the sources said, requesting anonymity because of the sensitivity of the matter.
“He thinks existing manufacturers should unite and invest in the future and become one of the two or three companies that will survive.”
Zhejiang Geely already owns Volvo Cars, LEVC, the maker of London’s black cabs, a 49.9 percent stake in Malaysian automaker Proton, a $3.3 billion stake in Volvo Trucks and flying car start-up Terrafugia.
Mercedes-Benz already has an industrial alliance to develop cars and trucks with Renault-Nissan, which owns a 3.1 percent stake in Daimler, and has announced plans to build electric cars with existing Chinese joint-venture partner BAIC Motor Corporation.
The stake purchase followed an initial approach last November, when Li sought to buy a Daimler stake as a way to access Mercedes-Benz technology for electric cars and trucks, including battery technology, to help Geely comply with a Chinese crackdown on pollution.
Geely sees potential in Daimler because it is developing high-speed Internet connections for autonomous cars at a time when Li believes satellite-based Internet connections could become more important for the auto industry, the source further explained.
Sources at the time told Reuters that Geely had asked Daimler to issue new shares so that it could buy a stake, but the Germans turned down the offer saying they did not want to dilute existing shareholders.
Li changed tactics and quietly accumulated shares. The 9.69 percent stake is the biggest single holding in the maker of luxury cars, trucks and vans, according to Thomson Reuters data.
“Daimler is pleased to have won a new long-term investor who is convinced of the innovation power, strategy and the potential of Daimler going forward,” the German company said on Friday.
“Daimler knows and respects Li Shufu as a Chinese entrepreneur of particular competence and forward thinking.”
Chinese investors in German technology companies have previously opted to take a consensual approach, buying incremental stakes in companies such as Kuka and Kion, typically after long consultation with management and other stakeholders.
The source said that Daimler and Geely had not held concrete talks about how to structure a potential joint venture, adding: “You know we have to become a stakeholder in order to engage.”
Geely’s move to become one of Daimler’s largest shareholders hit some speed bumps in recent weeks — an issue that has not been completely resolved, one of the sources familiar with the talks said.
Swedish truck maker AB Volvo, in which Geely took a stake late last year, has been objecting to Geely’s potential move on Daimler, one of the world’s largest commercial truck makers by sales, due to anti-trust concerns.
“We will protect interests of both companies by abiding laws in the country and the company’s governance structure. We are not seeking to have a controlling power in Daimler. We are just one of the investors in that given company,” the source said.
The size of the holding accumulated by Li raises questions about how he was able to buy the stake without first alerting the German markets regulator that he had surpassed the 3 percent and 5 percent ownership thresholds.
In early February, Geely began courting Germany’s automotive establishment with a carefully timed public relations campaign. Li gave a video statement to Germany’s Car Symposium, an annual automotive congress held in Bochum which is attended by senior automotive leaders.
Li underlined that Geely’s stewardship of the Swedish carmaker Volvo brand had contributed toward “growth and prosperity” in Europe.
His statement was followed by a keynote speech held by Geely board member Carl-Peter Forster, a former BMW board member and the former head of German carmaker Opel.
Forster explained that in the areas of electromobility and autonomous driving there should be more cooperation.
“We are in competition with one another, but should cooperate in areas where it makes sense,” Forster told the audience.
Turkey sees lower growth, double-digit inflation in next years
- The economy, which grew by 7.4 percent in 2017, would expand by just 3.8 percent in 2018 and then 2.3 percent in 2019
- For 2020 and 2021, the forecasts were more optimistic, with growth seen at 3.5 percent
ISTANBUL: Turkey, which was last month buffeted by its worst currency crisis in recent years, on Thursday forecast sharply lower growth coupled with persistently high inflation in its new medium-term economic program.
The economy, which grew by 7.4 percent in 2017, would expand by just 3.8 percent in 2018 and then 2.3 percent in 2019, according to figures unveiled at a presentation in Istanbul by Finance Minister Berat Albayrak.
Inflation, meanwhile, would balloon to 20.8 percent at the end of 2018, moderating only slightly to 15.9 percent in 2019, the figures showed.
For 2020 and 2021, the forecasts were more optimistic, with growth seen at 3.5 percent and 5.0 percent, respectively, while inflation is seen moderating finally to a single digit 9.8 percent in 2020 and then a year later to 6.0 percent.
Albayrak, who is a son-in-law of President Recep Tayyip Erdogan, said what he termed the “New Economic Programme” would be based on the three principes of “balancing, discipline, and change.”
“Our aim is to write a new success story,” he said.
Greater economic prosperity has been one of the pillars of Erdogan’s popularity in his over 15 years in power, with the country seeing impressive growth rates in consecutive years.
However economists have warned that the all-out push for growth has led to a potentially dangerous overheating, with inflation rampant, the currency account deficit widening and doubts over the health of the banking system.
These fault lines were exposed in August when a diplomatic spat with the United States caused a crash in the value of the lira, sparking fears of a full-blown economic crisis.
Albayrak said that in 2019 projects whose tender had not been carried out would be “suspended” and vowed Turkey would create two million new job opportunities by 2021.
“We will realize a program to totally fight against inflation,” Albayrak said, highlighting food inflation which has particularly worried Turks.
Markets greeted his assessments as realistic but the lira was trading lightly lower against the dollar at 6.2, a loss of 0.8 percent in value on the day.