China’s Geely takes 3% stake in Daimler
February 13, 2018 Category China News Round-up, Weekly
Chinese carmaker Zhejiang Geely Holding Group, owner of Volvo Cars, has spent USD3 billion for a stake of just under 3% in German carmaker Daimler as it aims to become a global player. The purchase of the shares on the secondary market provides further evidence that Geely, controlled by billionaire Li Shufu, is keen to access Daimler’s electric car battery technology and wants to set up an electric car joint venture with Mercedes-Benz parent in Wuhan, the capital of Hubei province. Daimler currently has a joint venture with Chinese carmaker BAIC Motor. Geely would not comment on the issue.
“Investing around the world in quality assets would help Geely to transform itself into a global player,” said Yale Zhang, Managing Director of consultancy Automotive Foresight. “But it remains to be seen whether Daimler wants to establish a joint venture with Geely.” The Chinese company’s offer to buy a 5% stake in Daimler through a share placement was rejected by Daimler last year. It is unclear whether Geely will continue to increase its holding on the open market.
Geely, which bought Volvo Cars from Ford in 2010, has been reinforcing its go-global strategy with active purchases of foreign assets – including an 8.2% stake in Swedish truck maker Volvo, 49.9% of Malaysia carmaker Proton and 51% of iconic British sports car marque Lotus Cars – in 2017. The Chinese carmaker’s successful efforts to marry European styling and technology to Chinese manufacturing capability have boosted its profitability and enriched its product offerings.
Hong Kong-listed subsidiary Geely Automobile Holdings saw its shares surge 272% in 2017. Geely Automobile’s profits jumped 128% to CNY4.3 billion in the first half of 2017. Geely’s January to June shipments increased by 89% to 530,627 units.
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