News ID : 1999
Publish Date : 25 February 2018 - 15:33
The chairman of Chinese carmaker Geely has built up an almost 10 percent stake in Mercedes-Benz owner Daimler , making a $9 billion (£6.4 billion) bet that he can push through an alliance to access the German company's technology.
Khodrocar - The purchase by Li Shufu means Geely, China's largest privately-owned automaker, is now Daimler's biggest shareholder.

Geely said on Saturday there were no plans "for the time being" to raise the stake further. Instead, it will seek to forge an alliance with Daimler, which is developing electric and self-driving vehicles, to respond to the challenge from new competitors such as Tesla <TSLA.O>, Google <GOOGL.O> and Uber, which are all working on their own new technology cars.

"No current car industry player is likely to win this battle against the invaders from outside without friends. To achieve and assert technological leadership, one has to adapt a new way of thinking in terms of sharing and combining strength. My investment in Daimler reflects this vision," Li said.

Zhejiang Geely Holding has been on an expansion drive. It owns Volvo Cars, LEVC, the maker of London's black cabs, and last year took a majority stake in sports car maker Lotus, a 49.9 percent stake in Malaysian automaker Proton, a $3.3 billion stake in Volvo Trucks and control of flying car start-up Terrafugia.

"It's not clear what Geely wants and how it's going to work, but we view this move as part of a broader Chinese move to gain involvement in the European automotive industry," Bernstein Research analyst Max Warburton said in a note late on Friday, shortly after the stake was disclosed in a regulatory filing.

"China wants a payback after spending a decade gifting the European auto industry super-normal growth and profits. Now it wants more direct access to technology, brands and profits."



IF AT FIRST...

The stake purchase follows 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 familiar with his thinking said.

In November, Geely asked Daimler to issue new shares so it could buy a stake, but the German company turned down the offer saying it did not want to dilute existing shareholders, sources at the time told Reuters.


Source: Reuters
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