To applause from analysts, the German-U.S. auto giant further streamlined its financing activities by selling parts of its U.S.-based DaimlerChrysler Capital Services to GE Capital for 1.3 billion euros.
Making the merger work
In its bid to focus on its core business, German-U.S. auto giant DaimlerChrysler AG said Thursday it will sell parts of its U.S. special financing arm, DaimlerChrysler Capital Services, for 1.3 billion euros to GE Capital, the financing subsidiary of General Electric.
The area DaimlerChrysler is selling is involved mostly in financing commercial real-estate and it came into being as a result of the diversification strategy that the group pursued in the early 1990s. The sale is to be completed in the first quarter of 2002
A group spokesman declined to provide details about the profit made on the sale. DaimlerChrysler Services has a total financing volume of around 130 billion euros, making it one of the leading producer-linked financing services firms in the world.
DaimlerChrysler Capital Services is also involved in aircraft and ship leasing. There are long-standing rumors that the group plans to sell its aircraft leasing activities.
But car-related financing activities are being expanded. The DaimlerChrysler Bank, created from the former Mercedes-Benz Finance, is set to be launched by the middle of this year.
Analysts generally view DaimlerChrysler's decision to streamline its financing activities as positive. "The sale is the right thing to do in terms of strategy," said Jürgen Pieper at Bankhaus Metzler, adding that the 1.3 billion euros purchase price demonstrated that there were still a few hidden treasures in the group's services arm. The proceeds raised could be used to reduce the group's debt levels, he said.