Daimler intends to rise its BBAC stake to 75%

It was previously reported that BAIC is planning to increase its stake in Daimler to about 10%, becoming Daimler's largest shareholder. According to reports, Daimler is seeking to buy a majority stake in its Chinese operations. It has been exploring several options to strengthen its control of Beijing Benz Automotive Co. (BBAC), its Chinese joint venture with BAIC Group, including a plan to raise its stake to 75% from the current 49%

BBAC's registered capital is US $ 3.2126 billion, of which BAIC contributed US $ 1.6384 billion, accounting for 51%, Daimler's share is 38.665%, and Daimler's wholly-owned subsidiary, DGRC, holds 10.335%.

It is undeniable that BBAC is the main source of profit for BAIC. Facing huge profits, Daimler has been looking forward to acquiring a majority stake in BBAC for many years. According to financial report data, in the first half of 2019, BAIC's operating income was 87.764 billion yuan, an increase of 14.1% year-on-year, of which BBAC revenue alone reached 77.707 billion yuan, accounting for 88.7% of total revenue.

Recently, BAIC has been trying to increase its stake in Daimler, which has also been interpreted as a response to Daimler's BBAC equity adjustment. According to a person familiar with the matter, HSBC is assisting BAIC in completing this new investment. As of November 15, HSBC directly held 5.23% of direct voting rights of Daimler AG. If the increase is completed, BAIC will become Daimler's largest shareholder and win a seat on the board of supervisors. This measure is not only a countermeasure implemented by BAIC in response to Daimler's equity adjustment, but also hopes to maintain a certain important position in BBAC by holding more shares in Daimler.