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Tue, Mar 24, 2009 - Page 10 News List

Abu Dhabi set to become Daimler’s largest shareholder


Abu Dhabi was set to become the largest stakeholder in Germany’s beleaguered auto giant Daimler with the acquisition of 9.1 percent of the company, it was announced on Sunday.

Aabar Investments, a public joint stock company of Abu Dhabi, said in a joint press statement with Daimler that it would acquire newly-issued shares for a total of 1.95 billion euros (US$2.6 billion).

The move means Abu Dhabi, the capital of the United Arab Emirates, will displace Kuwait as the largest shareholder in the company which makes Mercedes-Benz cars.

“We are delighted to welcome Aabar as a new major shareholder that is supportive of our corporate strategy,” said Dieter Zetsche, chairman of the Daimler board of management. “We look forward to working together to pursue joint strategic initiatives.”

Among the initiatives are electric vehicles, projects aiming at the reduction of carbon dioxide emissions and development and production of innovative compound materials for use in automotive manufacturing.

The state-controlled Aabar is paying 20.27 euros per Daimler share, about 5 percent less than the 21.34 euros the shares registered at the close of trading in Frankfurt on Friday.

“Daimler is an iconic brand and a financially strong company with a reputation for excellence worldwide. We are delighted to having received the opportunity to be making this investment,” said Khadem al-Qubaisi, chairman of Aabar.

The Daimler board approved a 10 percent increase in the company’s share capital on Sunday, with an exclusion of subscription rights for existing shareholders. This means Kuwait’s stake will drop from 7.6 percent to 6.9 percent.

Rumors that Abu Dhabi was interested in a stake in Daimler have been making the rounds for months. Aabar is controlled by the state-run International Petroleum Investment Company (IPIC).

In October, IPIC took a controlling interest in Ferrostaal, the service sector of Munich-based truck manufacturer MAN.

Like other automobile manufacturers, Daimler has been hit badly by the global economic downturn. The company sold 25 percent fewer cars in the first two months of this year and expects to record an operating loss for the first quarter.

Last year, profits slumped by nearly two-thirds to 1.4 billion euros.

Under the new arrangement, Daimler will establish a training center in Abu Dhabi to educate young people for positions in the automotive industry.

The new shareholder said it plans a long-term investment and does not intend to exert influence on company strategy.

“The management is doing an excellent job. We want to learn from them and will not be involved in the day-to-day operations,” al-Qubaisi said in an interview.

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