Daimler to split truck and car companies into two state-owned companies

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Daimler will create the world’s largest autonomous commercial vehicle manufacturer by dividing its Mercedes-Benz truck and car business into two public companies.

It will list its trucks separately, paving the way for one of Germany’s biggest flotations this year and allowing the two companies to focus on different emissions-free technologies.

Daimler shares were up 9% to € 64.48 in after-hours trading as investors backed the expected move, which analysts say could price the truck business up to $ 35 billion. euros. Its parent company is valued at around 64 billion euros.

Daimler shareholders will receive a “significant controlling stake” in the new unit, the Stuttgart-based company said on Wednesday.

It aims to complete the division’s public offering on the Frankfurt Stock Exchange by the end of the year.

The remaining automotive business will be renamed Mercedes-Benz “at the appropriate time,” Daimler added.

“This is a historic moment,” said Managing Director Ola Källenius. “This represents the start of a major overhaul of the company.

“Both companies operate in sectors facing major technological and structural changes. In this context, we believe that they will be able to function as effectively as possible as independent entities. “

The chairman of Daimler’s powerful works council, Michael Brecht, endorsed the plan, saying management had promised “extra support” to secure jobs.

Daimler’s job guarantee for some German workers would continue to apply until the end of the decade, he added.

The flotation of Daimler’s truck unit has long been delayed and follows Volkswagen’s decision to divest its truck business, Traton, in 2019.

VW has also acquired US truck maker Navistar in an attempt to gain a foothold in the lucrative US commercial vehicle market.

Daimler first restructured into a holding company containing an automotive division, a truck unit and a financial services branch in 2019.

But management has consistently emphasized that there are few synergies between the two manufacturing companies, especially when it comes to phasing out combustion engines.

While Mercedes-Benz has invested billions of euros in battery electric technology, Daimler Trucks has taken a much broader approach.

Last year it signed a joint venture with rival Volvo to develop vehicles that run on hydrogen.

The larger markets of the two Daimler companies also diverge. Most of Daimler Trucks ‘revenue comes from the United States, followed by Europe, while China is by far Mercedes’ largest and most profitable market.

Although Daimler did not specify how much of its truck business it intended to float, analyst Arndt Ellinghorst of Bernstein estimated that a quarter of the company would be for sale, raising between 7 and 8 billion euros.

Daimler also said its Mobility division, which includes its financial and leasing services, as well as its carsharing and ridesharing business, would be roughly split between the two new companies.

“This marks the end of the obsession of German automakers with these services,” said Ferdinand Dudenhöffer, director of the Automotive Research Center in Duisburg. “Reality has gone beyond mobility,” he added.

Along with other German automakers, Daimler benefited from a strong rebound in the Chinese economy late last year.

Preliminary figures released last week showed profit before interest and taxes to be over € 6.6 billion, beating analysts’ estimates of around € 5.2 billion for the year.

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