China's Geely buys 7.3b euro Daimler stake in global push

25 February, 2018, 00:36 | Author: Bertha Harmon
  • Daimler's Need For An Anchor       The Mercedes Benz owner has very few strategic shareholders              Source Bloomberg

With revenue exceeding RMB 270 billion (about United States dollars 43 billion) in 2017, the Zhejiang Geely Holding Group is China's largest privately owned automotive manufacturing company and one of the world's leading providers of electro-mobility. In order to succeed and seize the technology highland, one has to have friends, partners, and alliances and adopt a new way of thinking in terms of sharing and united strength.

Late previous year, Geely acquired a stake in the Volvo Trucks group, a separate entity, becoming its largest investor in a deal that has not yet closed.

Daimler and Geely could not be immediately reached by Xinhua for comments.

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Geely bought the struggling Volvo VOLVB -1.31% auto brand in 2010 and invested more than $3 billion in a stake in Volvo AB, the separate truck maker, late past year.

Its move to buy more Daimler poses a big challenge for the Germany-based auto maker since Mercedes-Benz already holds an industrial alliance for developing vehicles with Renault-Nissan, which is owner of 3.1% of Daimler, and announced plans to build new electric vehicles with existing joint venture partner in China BAIC Motor Corporation.

"Chinese companies understand that leading European firms lean heavily on the People's Republic for sales and profits", said Michael Dunne, president of Dunne Automotive, a Hong Kong-based investment advisory firm focusing on automotive markets in Asia.

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What this means for Daimler and Mercedes is hard to say, but it does seem likely this is nothing more, at least for now, than a strategic investment from Li, investing in a firm he believes has a future, rather than trying to do a Volvo or Lotus recovery (or a London Black Cab) through Geely, which clearly Daimler doesn't need, or a full-blown takeover. "It is the duty of investors to follow these and to check them".

The deal, which is yet to be approved by Chinese regulators, has boosted Geely's existing overseas investment portfolio. We are not seeking to have a controlling power in Daimler. Mr Li gave a video statement to Germany's Car Symposium, an annual automotive congress attended by senior industry leaders.

Geely itself is no stranger to the European auto business, having bought Sweden's Volvo in 2010.

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