Chairman of China's Geely Has 9.7% Stake in Daimler--2nd Update
24 February 2018 - 6:46AM
Dow Jones News
By Robert Wall
The chairman of Chinese car maker Zhejiang Geely Holding Group
Co. has accumulated a 9.7% stake in German car and truck giant
Daimler AG -- an investment worth about $9 billion at current
market prices.
The investment wasn't made directly by the company -- which has
invested in a series of foreign car companies in recent years as it
simultaneously ramped up its domestic car business -- but instead
was made on behalf of the company's chairman Li Shufu, according to
a filing late Friday.
The stake will be held by a vehicle called Tenaclou3 Prospect
Investment Ltd., according to the filing. Geely representatives
weren't immediately available to comment.
Daimler said it welcomed the investment as a "vote of
confidence" in its future. The German car maker didn't say whether
Mr. Li would get a board seat, but said it looked forward to
discussing the investment with him.
The move marks the latest in a series of steps that Mr. Li and
Geely have taken over the better part of a decade to knit together
an automotive empire stretching around the world. The investment in
Daimler, whose brands include Mercedes-Benz, marks Mr. Li's biggest
overseas investment so far.
Geely agreed to buy Volvo, a struggling brand, almost a decade
ago for $1.8 billion, making what was essentially China's debut as
a player in the global auto industry. That purchase drew widespread
skepticism amid doubts the Chinese company, little known outside
its home country at the time, could turn Volvo around.
But after heavy investment from Geely, Volvo is now a thriving
-- if still small -- brand. More recently, it and Geely have pushed
aggressively into electric car development. Volvo promised last
year to roll out electric or hybrid electric engines in all its new
models starting in 2019.
The Chinese car maker also invested more than $3 billion in a
stake in Volvo AB, the truck maker separate from the Volvo car
brand, late last year.
Last May, Geely agreed to buy a 51% stake in British sports-car
brand Lotus and a 49.9% stake in struggling Malaysian car maker
Proton Holdings Bhd., which gave it a foothold in southeast
Asia.
Daimler already has links to China through a joint venture with
BAIC Motor Group. The two agreed last year to make electric
vehicles for the Chinese market, the world's largest.
The investment doesn't necessarily signal any closer ties
between Daimler and Geely. Mr. Li, through his holding vehicle,
would be entitled to dividends like any other shareholder and
becomes the company's biggest investor. Without a board seat,
though, he wouldn't necessarily have any strategic influence.
Still, the investment could cause waves in Germany. The
government there has become increasingly anxious about a wave of
Chinese investments and takeovers of its companies. Last year,
Berlin tightened scrutiny of foreign direct investment. In 2016,
Chinese firms, often backed by government money, bought German
competitors in a number of industrial fields. At one point, the
purchases were coming in at a rate of one a week -- a push analysts
believe reflects the Chinese government's plans to dominate
advanced manufacturing by 2025.
Write to Robert Wall at robert.wall@wsj.com
(END) Dow Jones Newswires
February 23, 2018 14:31 ET (19:31 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.