It was one of the worst-kept secrets: Two weeks ago, Reuters reporters had picked up the scent of Daimler planning a big investment into China’s BAIC. This week, rumors started flying around in Beijing that it is true. Today, Daimler announces, as expected, that “Daimler AG is going to invest in BAIC Motor, the passenger car unit of BAIC Group, one of the leading automotive companies in China.”
Daimler is taking a 12 percent stake in BAIC Motor and gets two two seats on the Board of Directors of BAIC Motor. Also as suspected, 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 stroke of a pen, the Beijing Benz JV and its full profits appear on the books of BAIC, thereby multiplying the value of the stock. At the same time, and taking a page out of GM’s golden share playbook,”Daimler will increase its stake in the integrated sales joint venture Beijing Mercedes-Benz Sales Service Co. by 1% to 51%.”
Daimler will pay 640 million euros ($869 million) for its stake in BAIC Motor, an investment that most likely will come back in spades once BAIC Motors is listed. “We will be the first non-Chinese manufacturer to take a stake in a Chinese OEM,” finance chief Bodo Uebber told Reuters.
Not exactly, says Reuters, noting that “in 2009, German truckmaker MAN acquired a blocking minority in Chinese peer Sinotruk.”
PS: Having hurt enough feelings already, we steer clear of the traditional tie-up pictures, and show images of a man with a huge stach and scenes of heavy petting instead.