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2-min read

Germany Wary After China's Geely Swoops on Daimler

Under current German law, the government can only become active if a stake threshold of 25 percent is exceeded.

Reuters

Updated:February 28, 2018, 6:17 PM IST
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Germany Wary After China's Geely Swoops on Daimler
The Geely logo is shown at the Chinese automaker's display during the media preview at the 2008 North American International Auto Show in Detroit January 15, 2008. (Photo: Reuters)
Germany must ensure it is not exploited by other countries, its economy minister said after China-based Geely bought a $9 billion stake in Mercedes maker Daimler.

Geely announced its 9.7 percent stake in Daimler, surprising the market as it had not previously disclosed having crossed regulatory thresholds of 3 and 5 percent.

Economy minister Brigitte Zypries stuck to Berlin's position that the Chinese automaker's swoop was a business decision that she would not judge.

But, in interviews released by Daimler's home-town newspaper Stuttgarter Zeitung and business daily Handelsblatt, she said investors must abide by market rules.

Germany's openness must "not be used as a gateway for other countries' industrial-political interests," she added in the Handelsblatt interview.

Financial and markets regulator BaFin, which oversees the proper disclosure of stakes, said it was not yet ready to comment on the announcement by Geely.

Geely said it wanted to forge an alliance with Daimler, which is developing electric and self-driving vehicles and is the only one of Germany's carmakers not controlled by a family.

Daimler said in a brief statement it welcomed its new long-term shareholder, with whom it could "constructively discuss the change in the industry".

Zhejian Geely Holding also owns several other carmakers including Sweden's Volvo Cars, London's black-cab maker LEVC and its own Geely Automobile Holdings. It has agreed to buy a $3.3 billion stake in Volvo Trucks.

RUFFLED FEATHERS

On Monday, there was the first sign of upset in the industry as Volvo Trucks dropped the chief executive of Geely's Volvo Cars from its board, citing competition concerns with Daimler Trucks.

"The reason that Hakan Samuelsson is not proposed for re-election is the announcement that Geely Group has become the largest shareholder of the German vehicle manufacturer Daimler, one of the Volvo Group's major competitors," it said.

Germany has tightened its rules on foreign corporate takeovers, becoming the first EU country to do so last year, following a series of Chinese deals giving access to Western technology and expertise.

The biggest such deals had taken place earlier in 2017, with Chinese home appliance maker Midea Group buying German robotics firm Kuka, and Hong Kong billionaire Li Ka-shing's buying German metering firm Ista, each at a price of 4.5 billion euros ($5.5 billion).

EU trade ministers will meet this week to discuss a range of issues including how better to protect strategically important European companies from unwanted investors.

But under current German law, the government can only become active if a stake threshold of 25 percent is exceeded, a government spokeswoman told a news conference.

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| Edited by: Manav Sinha
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