Daimler turns down Geely's offer to buy 5% stake in it

Daimler - the maker of Mercedes-Benz cars, has turned down an offer from Geely - the Chinese company that owns Volvo, to purchase a 5% stake in it. Geely had plans to buy this stake, valued at US$ 4.5 billion, through discounted shares of Daimler.

According to a media report, the Chinese company was aiming to acquire Daimler's electric car battery technology and try to form a joint venture in China. The two companies are reported to have met for a discussion in Beijing, where Geely offered to purchase a 3% - 5% stake if Daimler would issue new shares at a discounted price. However, Daimler reportedly asked Geely to buy shares from the open market if it was interested.

The German company has refrained from entertaining such requests in the past as well, citing concern for its existing shareholders. A similar deal with their joint venture partner BAIC did not materialise due to the same reason.

At present, Daimler has a joint venture with BAIC Motor Corp in China. Recently, it announced plans to invest US$ 757 million in electric vehicle and battery production with BAIC. It also has a joint venture with BYD Auto in the Asian country.

Geely is currently valued at US$ 32 billion and holds a 5% market share in the Chinese auto market. If the proposed offer would have been taken up by Daimler, Geely would have become the third-largest stakeholder in the company after the Kuwait Investment Authority and BlackRock, who hold a 6.8% and 6% stake respectively.

Source - Reuters