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Daimler rejects Geely's offer to buy 5% stake
Reuters | 2017/12/1

BEIJING -- Daimler AG turned down an offer from Zhejiang Geely Holding Group to take a stake of up to 5 percent in the German company via a discounted share placement, sources said. 

Geely is eager to access Daimler's electric-vehicle battery technology and wants to establish an EV joint venture in Wuhan, sources said.

Geely, which also owns Volvo Car Corp., still hopes it can secure a deal over the coming weeks, the sources said. 

The two automakers met in Beijing at Geely's behest. Geely offered to take a stake of 3 to 5 percent if Daimler would issue new shares at a discount, the sources said. 

A 5 percent stake would be worth $4.5 billion (29 billion yuan) at current market prices. Although Daimler declined the offer, it told Geely it was welcome to buy shares in the open market, the sources added. 

It was not immediately clear what kind of discount for the shares Geely had in mind or whether Geely was interested in buying shares on the open market 

A Geely spokesman declined to comment. A spokesman for Daimler said the company was "very happy with our shareholder structure at present," but added that it would welcome new investors with a long-term interest in the company. 

Carmakers in China have embarked on a flurry of deals as they scramble to boost EV production to meet a government mandate starting in 2019.

Geely, which has a market value of $32 billion, is the leading domestic brand in China with a 5 percent market share, according to an analysis by Nomura Securities. 

A stake of 5 percent would establish it as Daimler¡¯s third-largest shareholder behind the Kuwait Investment Authority¡¯s 6.8 percent share and BlackRock¡¯s 6 percent stake.
 
Daimler, however, has a long-established joint venture with Chinese carmaker BAIC Motor, which Daimler described as "our most important partner in China." 

This month it announced plans to invest at least 5 billion yuan ($757 million) in battery and EV production with BAIC in China. It also has another tie-up with BYD Auto Co., which is backed by U.S. billionaire Warren Buffett. 

Daimler previously has held similar discussions about an investment from BAIC. But the German automaker has consistently refused to issue new shares out of concern for existing shareholders.
 
Other recent potential deals involving global and Chinese automakers include Ford Motor Co.¡¯s announcement in August that it may launch an EV joint venture with Zotye Automobile. 

Any deal involving an equity stake in Daimler would be Geely¡¯s largest since it bought Volvo for $1.8 billion from Ford in 2010. This week, Geely and Volvo launched the first model under their new brand, Lynk & CO.

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