Daimler AG and Beijing Automotive Group (BAIC) are strengthen their partnership through a new deal with Daimler acquiring a 12% stake in the Chinese automaker. In a recently signed agreement by two companies, Daimler is going to invest in BAIC Motor, the passenger car unit of BAIC Group. BAIC Motor will be issuing new shares corresponding to the new investment. The move comes ahead of BAIC Motor's plans to go public with its initial public offering (IPO). As with any major deal in China, it will be subject to government approval before being finalized; both companies are expecting to close the transaction by the end of 2013 or early 2014.
Present at the meeting and signing at the Mercedes-Benz Museum in Stuttgart were Daimler's Chairman Dr. Dieter Zetsche, Chief Financial Officer Bodo Uebber, and Hubertus Troska, Daimler's new Board Member for Greater China; from BAIC were Chairman Xu Heyi, Deputy General Manager Zhang Xiyong, and CFO Ma Chuanqi.
"Our investment is a strong sign of the increased level of trust and cooperation between our two companies and clearly emphasises the long-term commitment to a joint successful future of our two companies. It is also significant so that both companies can actively participate in the opportunities of the Chinese automotive market," said Dr. Dieter Zetsche, Chairman of Daimler AG.
Part of the deal includes two board seats at BAIC for Daimler; an stake increase in Beijing Benz Automotive Company (BBAC) by BAIC from its present 1% to 51% to facilitate for consolidation of the venutre to BAIC in time for its IPO; and Daimler will increase its stake in the integrated sales joint venture Beijing Mercedes-Benz Sales Service Co. by 1% to 51%.
"Daimler’s investment in BAIC’s stake will go a long way in accelerating the development of BAIC’s self-owned brand in terms of capital, technology, management, and brand. At the same time, this will help Mercedes-Benz to boost its business performance in China," said Xu Heyi, Chairman of BAIC.
Joint activities by the two companies include BBAC, which has been producing Mercedes-Benz passenger cars since 2006, Beijing Foton Daimler Automotive Co., Ltd. (BFDA), which has been jointly manufacturing Auman-branded medium- and heavy-duty trucks since mid-2012, and most recently, the establishment of Beijing Mercedes-Benz Sales Service Co., Ltd. This significant milestone means that all sales activities for imported and locally produced Mercedes-Benz cars will now be combined under one roof.