Geely chairman becomes the largest shareholder in German manufacturer Daimler
26 February 2018
The chairman and main owner of Chinese manufacturer Geely has amassed a 9.69% stake in German carmaker Daimler, making him the group’s largest shareholder.
The purchase of shares is worth around €7 billion in the current market price for Daimler shares. Li Shufu has been building his stake in the company in recent weeks with small purchases of shares in the stock market. Geely owns Volvo, Lotus and the London Electric Vehicle Company (LEVC), which builds black cabs. The company also plans to introduce to Europe its new brand Lynk & CO.
A Daimler spokesman called the stake purchase a private investment by Li. ‘We are delighted, with Li Shufu, to have won over another long-term investor who is convinced of Daimler's innovative prowess, strategy and future potential,’ the spokesman said. ‘Daimler knows and respects Li Shufu as a Chinese entrepreneur of particular competence and forward thinking.’
Li's stake purchase makes him the top shareholder in Daimler ahead of the Kuwait Investment Authority, which owned 6.8%as of Sept. 30, according to Thomson Reuters data.
Geely identified Daimler as a company it would like to strike an alliance with to develop electric vehicle (EV) technology. The German manufacturer is currently developing its EQ range of electric vehicles in order to combat declining diesel sales and is also exploring Hydrogen power.
Meanwhile, in China, new quotas set to come into force during 2019 means manufacturers are racing to develop electric technology, with a number of joint ventures being set up to ensure foreign manufacturers can take advantage of sales in the world’s biggest automotive market.
‘Daimler is an outstanding company with first-class management. It will be an honour to support this unique team under the leadership of Dieter Zetsche in the future,’ Shufu said in a statement. ‘The competitors which technologically challenge the global car industry in the 21st century are not part of the automotive industry today. But with challenges come opportunities. No current car industry player will be able to win this battle against the invaders from outside independently. To succeed and seize the technology highland, one has to have friends, partners, and alliances and adopt a new way of thinking regarding sharing and united strength. And we have to act now. My investment in Daimler reflects this strategic vision.’
Geely has suggested that its 9.69% stake in the company will remain at that level ‘for the time being.
Daimler welcomes another major investor and sees the investment as a vote of confidence, it said in a statement. ‘Li Shufu is a Chinese entrepreneur Daimler knows well and regards highly in terms of his competency and focus on future developments,’ spokesman Joerg Howe said. ‘Daimler already has a strong footing in China. We have a very strong partnership with our existing cooperation with BAIC Motor.’
The move is expected to be scrutinised by the German government, ‘We have to look at it very closely,’ Economy Minister Brigitte Zypries told local newspaper Stuttgarter Zeitung, adding that the decision by Shufu, who is chairman of Mercedes rival Volvo Cars, to buy a 9.7% Daimler stake required explanation. However, a government spokesperson has suggested that the deal was a ‘company decision’ and did not need action by Berlin.
Photograph courtesy of Daimler