The BAIC Group, a Beijing-based car manufacturer, is reportedly seeking to acquire up to 5% in shares in German-based multinational Daimler, Reuters has said citing sources close to the deal.
The stake is BAIC’s move to secure the state-owned enterprise’ investment in Beijing Benz Automotive, Daimler’s Mercedes-Benz manufacturing company headquartered in Beijing.
According to the sources, BAIC made its intentions known earlier in the year, informing Daimler that the company would be looking to buy between 4% to 5% stake.
Reuters cites two of the sources as saying that BAIC has set the ball rolling by asking local authorities in the city to support an acquisition of shares totaling 4-5% in the German-based manufacturer of the Mercedez-Benz car brand.
It is also reported that BAIC Group has begun buying Daimler shares, with one source noting that the Daimler’s share price has lately been “underpinned by a buyer who appears to be building a stake.”
According to the Reuters report, both BAIC Group and Daimler are yet to comment on the claims.
Question marks are being thrown at how far the BAIC Group will go in raising almost €3 billion that would facilitate a stake of 5% in Daimler. The 3-billion euro cost is calculated on the basis of the German multinational’s market valuation of 57.6 billion euros as of Friday, May 10.
At the moment, Daimler’s regulatory filings disclosed in German do not have BAIC listed as one of the key shareholders. According to German laws, a buyer would need to acquire up to 3% in a company before parties move to make a regulatory disclosure.
It is also understood that Daimler will not be issuing any new stock as it wouldn’t want to help external parties build stakes. That has ostensibly forced prospective buyers to go to the market if they want to acquire the shares.
BAIC’s interest in Daimler dates back to 2015, but the automobile company has upped its effort following a rival company Zhejiang Geely Holding Group building a 9.69% stake early last year.