Abu Dhabi Investor to Buy Biggest Stake in Germany′s Daimler | Business| Economy and finance news from a German perspective | DW | 23.03.2009
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Abu Dhabi Investor to Buy Biggest Stake in Germany's Daimler

An oil-rich Gulf investor, who also owns a premier English soccer club, plans to take a 9.1 percent stake in Germany's Daimler. The move would make Aabar Investments the luxury carmaker's biggest shareholder.

Mercedes Benz logo

Daimler's technology is attractive to Gulf investors.

An Abu Dhabi investor is paying 1.95 billion euros ($2.65 billion) to scoop up a 9.1 percent stake in Germany's Daimler, becoming the luxury carmaker's biggest shareholder at a time the world auto industry is undergoing its worst crisis in decades.

The Gulf-based Aabar Investments, which is a partially state-owned affiliate of International Petroleum Investment Company (IPIC), is paying 20.27 euros a share for the offering, a slight discount from Friday's closing price of 21.55 euros.

Daimler had increased its share capital by ten percent to allow Aabar to purchase the new equity stake. Besides its main energy interests, Aabar has diversified its investments in other sectors such as real estate, financial services and infrastructure projects.

Investments are planned

"We are delighted to welcome Aabar as a new major shareholder that is supportive of our corporate strategy," said Daimler CEO Dieter Zetsche late on Sunday.

Zetsche said the deal would give the group extra flexibility to invest in new automotive technologies.

For its part, Aabar said it values German technological prowess, and that it would work with Daimler on the development of environmentally friendly electric cars, research into new compound materials for the industry, and building a new training center in the emirates capital for nurturing engineering talent.

solar panels on buildings in emirates.

The petroleum rich Gulf region invests in new energy markets.

The chairman of Aabar's parent company, IPIC, is Mansour bin Zayed Al Nahyan, an Abu Dhabi sheikh and member of the royal family who owns the premier soccer club Manchester City.

Daimler, a pet of Gulf investors

This is not the first time that Daimler, whose flagship brand is Mercedes Benz, has attracted investors from the Gulf region. Daimler's second-largest shareholder is the state of Kuwait, whose stake would be reduced to just under seven percent after Aabar's move.

The Aabar investment is a boost for Germany's auto industry as Opel, the German subsidiary of beleaguered General Motors, is asking Berlin for government help.

Although Daimler is not in the same dire straits as Opel, group profits plunged last year when the Stuttgart-based giant had to completely write off its losses in US automaker Chrysler. Daimler had sold most of its Chrysler stake in 2007, but is struggling with a drop in worldwide demand for its premium cars and trucks.

The company's net profits for last year plummeted by 65 percent to 1.41 billion euros.

Need shareholders' approval in April

Most of Daimler stock is traded publicly on the Frankfurt stock exchange, unlike other German automakers such as BMW, Volkswagen and Porsche, which have huge family-owned stakes.

Although the board has already approved the deal with Aabar, shareholders would also have to give it the green light at Daimler's annual meeting on April 9.

In early Monday trading, Daimler shares jumped more than eight percent on the news.

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