Mercedes Benz car company falls into Chinese hands

Zhejiang - The founder of Chinese manufacturing company Geely Holdings has just bought shares worth about 7.3 billion euros (equivalent to 9 billion USD) of Daimler AG - the parent company of luxury car brand Mercedes-Benz. With the current shares, the Chinese billionaire becomes the largest shareholder of the German car company. Previously, Kuwait's foreign investment fund - an investor in Daimler for many decades - was the largest shareholder of this car company as of the end of December with a 6.8% stake.

Daimler confirmed the deal to Bloomberg. Billionaire Li Shufu, owner and chairman of Geely, bought Daimler shares through an investment fund.

The investment will help Geely enter the European luxury car market after months of testing and consideration. The Chinese company currently owns Volvo Cars AB, a brand whose new models have become popular and are a perfect alternative to German luxury cars.

"Geely's stake in Daimler clearly shows Greely's push for cooperation to gain more expertise in areas such as electric cars. At the same time, this deal also opens another path into the Chinese market for Daimler," said Frank Biller, an analyst.

Daimler says it welcomes other new investors and is on an upward trajectory. The company has reclaimed the top spot in the luxury car market from BMW by expanding its product line to include more SUVs and revamping its conventional car designs to be more sporty. The company says the new investment with the Chinese company is a clear demonstration of majority support for its current strategy.

"Li Shufu is a Chinese businessman that Daimler knows very well and highly values ​​in terms of his capabilities and focus on future development. Daimler has a solid foundation in China. We have a good cooperative relationship with BAIC Motor."

Geely has not yet responded.

Chinese companies have been active in buying German companies in recent years. HNA also has an 8.8% stake in Deutsche Bank; industrial robot maker Kuku was acquired by Midea, the world’s largest home appliance maker, a few years ago.

In December, billionaire Li became the largest shareholder of Swedish carmaker Volvo, the world's second-largest truck maker, in a $3.9 billion deal through Cevian Capital. In 2010, he bought Volvo from Ford Motor and last year also took control of British sports car maker Lotus Cars.

The Chinese company is now looking to expand both domestically and internationally after acquiring major international automakers. Geely plans to start selling a five-seat SUV under the Lynk brand outside China from mid-2019.

Experts say that after this deal, Geely will take an unprecedented step in the European market and Daimler will also witness unprecedented changes.

It is known that the German car company is planning the largest corporate restructuring in a decade to change the group structure into a joint stock company.

Daimler has been planning since late 2017 to change its previously rigid corporate structure to create a holding company with three separate divisions: Mercedes-Benz Cars and Vans; Daimler Trucks & Buses; and financial services. Although Daimler says this is not the beginning of any business split, some investors have asked the company to consider this strategy to create clarity between the units.

Daimler is not the only German carmaker with a large institutional investor: Volkswagen AG is controlled by the billionaire Porsche-Piech family and the government of Qatar. BMW is controlled by the Quandt-Klatten family./.