Original URL: https://www.ft.com/content/8b291ab4-4fe7-11e9-b401-8d9ef1626294China’s Geely set to buy half of Daimler’s Smart unit
Mercedes-Benz owner Daimler is nearing a deal to sell a 50 per cent stake in its small-car brand to China’s Geely, according to three people familiar with the plan.
The sale of the stake in its Smart division will be confirmed before the Shanghai Auto Show in April, said one of the people.
The move by Geely, which became Daimler’s largest shareholder last year, may be to help out the German group as it struggles to carry the lossmaking Smart brand, which sells only 130,000 cars a year — a fraction of the 2.25m cars Mercedes-Benz sells.
Daimler and Geely have become closer in the past year. In October, they announced a joint-business to offer ride-hailing services in China.
Daimler said the group had been speaking with “several possible co-operation partners” as it worked on the next generation of Smart products.
A spokesman for Geely declined to comment.
Geely has rapidly expanded in the past few years. It owns Volvo Cars, British sports car brand Lotus and Malaysia’s Proton and holds a stake in truckmaker Volvo Group.
The future of Smart under Daimler has been in doubt ever since the Mercedes-Benz owner announced last year that chief executive Dieter Zetsche would step down in May, ending a 13-year tenure.
Mr Zetsche had been a cheerleader for the compact car brand but his successor, Ola Kallenius, is thought to have less enthusiasm for the microcar arm, particularly as the German group’s profit margins have come under pressure in the past year.
Daimler does not break out earnings for Smart, but analysts think the brand has failed to generate profits since its founding 21 years ago. According to estimates from Evercore ISI, Smart loses between €500m and €700m each year.
However, a partial sale to Geely could face political opposition in Berlin, according to a banker close to Daimler, as Germany has recently voiced its concerns about the growing influence of Chinese companies on business in Europe’s largest economy.
When Geely purchased a 9.7 per cent stake in Daimler a year ago, Berlin was taken by surprise. One MP said at the time: “Geely just crept up on Daimler out of nowhere.”
A draft law was then approved last year to give the German government the right to block investments above 15 per cent by non-EU companies in sensitive industries, ranging from defence to energy.
Several European capitals are concerned that Chinese companies are acquiring assets in the EU to later transfer the technology back to China.
However, the potential of Smart, which aims to become 100 per cent battery-powered by 2020, is likely to be in China, the world leader for all-electric cars with a burgeoning market for compact models.
Volvo had a lot more upside. It was a luxury automaker, held in higher regard, etc.remember Volvo losing money for years, during the Ford period. Geely came in and look: profits!!
https://www.automotiveworld.com/news-releases/mercedes-benz-and-geely-holding-have-formally-established-its-global-joint-venture-smart-automobile-co-ltd-for-the-smart-brand/Mercedes-Benz AG (Mercedes-Benz) and Zhejiang Geely Holding Group (Geely Holding), the German and Chinese automotive groups, today announced that they have formally established the global joint venture “smart Automobile Co., Ltd.” for the smart brand after receiving the regulatory approvals.
The total registered capital of the Joint Venture will be 5.4 billion RMB to transform smart into a leading player in premium-and intelligent electrified vehicles. Both parties will equally contribute 2.7 billion RMB, the share of Mercedes-Benz AG will be mainly covered by the contribution of the smart brand. The global headquarters of the new joint venture has been set in Hangzhou Bay, Ningbo with operational sales functions based in China and Germany.
The new generation of smart vehicles will be designed by the worldwide Mercedes-Benz Design network and developed by the Geely global engineering network. Future production will be located in China.
http://global.geely.com/media-cente...regarding-possible-combination-of-businesses/Geely Automobile Holdings Limited (Hong Kong 0175) announces that the management of the company is in preliminary discussions with the management of Volvo Car AB (“Volvo Cars”) regarding a possible restructuring through a combination of the businesses of the two companies (the “Proposed Transaction”) into a strong global group that could realise synergies in cost structure and new technology development to face the challenges in the future. The intention would be to preserve the distinct identity of each of the brands Geely, Volvo, Lynk & Co and Polestar. It is intended that the combined business will be listed in both Hong Kong and Stockholm to enable it to access the capital markets.
As of the date of this announcement, no concrete timetable or detailed plans of the Proposed Transaction have been formed. The Proposed Transaction, if it materialises, will be subject to, among others, approvals of the respective boards and shareholders of the Company and Volvo Cars, regulatory approvals and prevailing market conditions. The Company will make further announcements in relation to the Proposed Transaction if and when required.
As the Proposed Transaction is only preliminary in nature, it may or may not proceed, shareholders and potential investors are reminded to exercise caution when dealing in the securities of the Company.