Daimler’s major partner BAIC plans to upstage rival Geely

Workers on an SUV production line of the BAIC in Beijing. BAIC Group has started buying Daimler’s shares from the open market. (AFP/File)
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Updated 15 December 2019

Daimler’s major partner BAIC plans to upstage rival Geely

  • The group sets in motion a strategy to double its stake to around 10 percent

FRANKFURT: Daimler’s main China joint venture partner BAIC Group has set in motion a plan to double its stake to around 10 percent and win a board seat in the German luxury carmaker, as it aims to upstage rival Geely, sources said.

State-owned Beijing Automobile Group Co. Ltd. (BAIC), which already owns a 5 percent shareholding in Daimler, has started buying the German company’s shares from the open market, said the sources who were briefed on the matter.

BAIC is currently Daimler’s third-largest shareholder but a stake of 10 percent will make it the biggest shareholder, surpassing its Chinese automaking rival Zhejiang Geely Holding Group which owns 9.69 percent of the German automaker and is seeking to expand its partnership with Daimler in China.

With the shareholding of around 10 percent, BAIC is looking to secure a seat at Daimler’s supervisory board, which Geely does not currently have, the sources said.

HSBC, which advised BAIC on its 5 percent stake purchase in Daimler earlier, is helping the Beijing-based group in the new investment, one of the sources said.

Daimler said in a regulatory filing last month that HSBC held 5.23 percent in Daimler’s voting rights directly as well as through instruments such as equity swaps as of Nov. 15.

Daimler said it had not received any notification about BAIC having raised its stake. Daimler’s China chief Hubertus Troska said on Friday “we welcome long-term investors in Daimler.”

Asked about BAIC and its potential to become a larger shareholder, he added, “we like each other. Let us see how things develop.”

A third source familiar with BAIC’s thinking said that BAIC wanted to be a bigger shareholder than Geely in Daimler in order to be seen as the German automaker’s senior-most partner in China. Reuters reported in November that BAIC had signaled intentions to extend its investment in Daimler, citing sources familiar with the matter. BAIC has been Daimler’s main partner in China for years and operates Mercedes-Benz factories in Beijing through the two automakers’ main joint venture, Beijing Benz Automotive.

Two months before its 5 percent stake purchase was announced in July, sources said that BAIC wanted to invest in Daimler to secure its investment in Beijing Benz Automotive.

The partners also planned to revamp manufacturing facilities to make Mercedes Benz-branded trucks via their commercial vehicle joint venture Foton Daimler Automotive (BFDA), Reuters reported in August citing a document and sources familiar with matter.

BAIC built its 5 percent Daimler stake after Li Shufu, chairman of Zhejiang-based private automaker Geely, built a 9.69 percent stake in Stuttgart-based Daimler in early 2018.


Egypt and Cyprus to boost Eastern Med gas ties

Updated 20 min 29 sec ago

Egypt and Cyprus to boost Eastern Med gas ties

  • The two countries also progressed talks to build a marine pipeline
  • The pair agreed to hold a further meeting within the next two weeks

CAIRO: Egypt and Cyprus plan to boost cooperation in developing gas infrastructure in the Easter Mediterranean.
Egypt’s petroleum and mineral resources minister Tariq Al-Mulla on Wednesday discussed plans to convert the East Mediterranean Gas Forum to an intergovernmental organization with Cyprus’s Minister of Energy Natasa Pilides.
The pair agreed to hold a further meeting within the next two weeks to complete the procedures for the forum.
The two countries also progressed talks to build a marine pipeline between the two countries to transfer natural gas from the Aphrodite gas field of Cyprus and re-export it through Egypt.
A 2010 study by the United States Geological Survey estimated the volume of gas reserves in the eastern Mediterranean basin to be about 345 trillion cubic feet of gas. This basin also contains some 3.4 billion barrels of oil, along with large quantities of gas liquids.