China's Geely buys $9-bn Daimler stake

The founder of Zhejiang Geely Holding Group has accumulated a stake worth about $9 billion in Daimler, marking the biggest investment in a global automobile manufacturer by a Chinese company.

Li Shufu acquired the 9.7 per cent holding through Geely Group, a company owned by the billionaire and managed by his carmaking group, according to a company statement Saturday. Bloomberg News first reported that Geely has become the single largest investor in the parent of Mercedes-Benz by building up a position of just under 10 per cent through purchases in the stock market in recent weeks.

The investment furthers Hangzhou-based Geely’s foray into the European premium automotive market and ends months of speculation about a tie-up. The Chinese company already owns Volvo Cars AB, whose refreshed line-up of vehicles have made it a popular alternative to the German luxury stalwarts.

“A Geely stake in Daimler would underscore their push for cooperation that’ll help them get more expertise, like electric cars,” said Frank Biller, a Stuttgart-based analyst with Landesbank Baden-Wuerttemberg. “At the same time, this opens another path into China for Daimler.”

Li has tapped overseas banks to help finance the investment, according to people familiar with the matter. In its statement, Geely said Li has a “long-term commitment” to the Daimler stake, and that neither Geely Group nor any other company in the Zheijang Geely Holding Group intend to acquire additional shares for now.

Daimler, which said it welcomes another major investor, has been on an upward trajectory, reclaiming the No 1 spot in luxury cars from BMW by broadening its offerings to include more SUVs and freshening its lineup with sportier designs. The Stuttgart-based carmaker sees the investment as a vote of confidence, spokesman Joerg Howe said by phone.

“Li Shufu is a Chinese entrepreneur Daimler knows well and regards highly in terms of his competency and focus on future developments,” Howe said. “Daimler already has a strong footing in China. We have a very strong partner with our existing cooperation with BAIC Motor.”

Chinese companies have been more active buying into German companies in recent years. HNA Group, the aviation-to-hotel conglomerate, has a stake of about 8.8 per cent in Deutsche Bank, and industrial-robot maker Kuka was purchased by Midea, the world’s largest appliance maker.

In December, Li became the biggest shareholder in Sweden’s Volvo AB, the world’s second-largest truckmaker. In 2010, he acquired Volvo Cars from Ford Motor, and last year won control of British sports-car maker Lotus Cars.