Daimler AG and Beijing Automotive Group (BAIC) will significantly deepen their already strong strategic partnership: according to a binding agreement signed today between executives of the two companies, Daimler AG is going to invest in BAIC Motor, the passenger car unit of BAIC Group, one of the leading automotive companies in China. This important joint strategic move comes ahead of an intention by BAIC Motor to launch an initial public offering (IPO) in the future. Daimler’s investment will take place through the issuance of new shares corresponding to a twelve percent stake in BAIC Motor.
Daimler’s Chairman of the Board of Management, Dr. Dieter Zetsche, Chief Financial Officer Bodo Uebber, and Hubertus Troska, Daimler’s new Board Member for Greater China, met today at the Mercedes-Benz Museum in Stuttgart with Chairman Xu Heyi, Deputy General Manager Zhang Xiyong, and CFO Ma Chuanqi of BAIC. As part of this meeting, they signed the contract between the two companies. Daimler’s shareholding in BAIC Motor is subject to the approval by the relevant authorities. A closing of the transaction is expected by the end of this year or early next year.
The agreement includes that Daimler will receive two seats on the Board of Directors of BAIC Motor. The two companies also agreed that BAIC will increase its stake in the production joint venture Beijing Benz Automotive Company (BBAC) by 1% to 51% and will thus be able to consolidate this joint venture within BAIC ahead of its IPO. At the same time, Daimler will increase its stake in the integrated sales joint venture Beijing Mercedes-Benz Sales Service Co. by 1% to 51%.
Dr. Dieter Zetsche, Chairman of the Board of Management Daimler AG and Head of Mercedes-Benz Cars: “Following our technical cooperation with BAIC Motor and the setup of our integrated sales company, we are now taking the next step in deepening our relationship even further. Our investment is a strong sign of the increased level of trust and cooperation between our two companies and clearly emphasizes 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“.
Xu Heyi, Chairman of BAIC: “The partnership between BAIC and Daimler has entered into its best phase ever, with further deepened cooperation in accordance with the mutual interests and development plans between both companies. 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.“
Bodo Uebber, Chief Financial Officer of Daimler commented: “Through this strategic investment in BAIC Motor, we will be the first non-Chinese manufacturer to take a stake in a Chinese OEM. It also gives us the opportunity to be part of the growth of one of its major domestic participants. At the same time, our decision demonstrates the full support of our partner's intention to publicly list its shares in the future, further strengthening BAIC Motor's competitive position.”
Hubertus Troska, Daimler’s Board Member responsible for China said: “BAIC is a long-standing, strategic partner of Daimler in China. With today's signing, we are bolstering this already strong relationship even further. I am very excited to be a part of our joint activities going forward.”
As one of China’s largest automakers, BAIC Group sold over 1.5 million vehicles in 2011. Daimler AG is one of the world’s most successful automotive companies. Both parties have already established a long-term strategic and trustful partnership, including significant investments in the Chinese automotive industry over the past years. Joint activities 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.