Daimler: A Takeover Target?
August 19, 2008

Speculation in Europe is intensifying over the possibility of a takeover of Daimler AG, parent of Mercedes-Benz and smart and the former parent of Chrysler.

Daimler CEO Dieter Zetsche has been drilled on the takeover question since the German company sold off Chrysler last year. He has insisted that Daimler is less vulnerable to takeover without. Company spokesman reiterated of late that Daimler is not a takeover candidate nor does the company see indications of an investor building a large stake.

However, sources close to Daimler management told the Financial Times, for a story in Tuesday's edition, that company executives indeed are very concerned about a possible takeover because of a number of converging factors.

The article cites the following as factors that are intensifying concern over a possible Daimler takeover:

· the "audacious" move by Schaeffler, the privately owned maker of ball bearings and car parts, to take over its larger rival Continental. Potential Daimler suitors could come from emerging markets - or even Daimler's home turf. Any approach on Daimler, the Financial Times notes, would likely face resistance from regulators and others in Germany as a matter of national interest, especially if it is a non-German entitity making the takeover attempt;

· Daimler's warning last month on likely lower future profits;

· Daimler shares prices that are down by more than 45 percent in the past 12 months, reducing its market value to the equivalent of $59 billion;

· the collpase in value across the entire auto industry and the industry's "grim outlook" that has put the worth of the world's still largest automaker, General Motors, at barely $6 billion;

· the lack of "an anchor investor" to ward off unwanted suitors as BMW has with the Quandt family as controlling shareholders. Daimler's only large shareholder is the Emirate of Kuwait, with a stake of 7.6 percent as of the end of April. The rest of its stock is free float, split between institutional and private investors. A new investor might be lured to strip Daimler of its 8.8 billion euros of net liquidity or urge it to split off the truck division, as some of its minority shareholders have long demanded, the paper noted. An analyst told the London paper that an opportunistic investor could attack Daimler very easily, given the notoriously weak attendance at shareholders' meetings in Germany. "If you have 5 billion euro and a bit of leverage, you could get a controlling stake," the analyst noted.

Photo by Daimler

Daimler CEO Dieter Zetsche has insisted the Germany company is less vulnerable to a takeover attempt without Chrysler than it was with Chrysler.

Posted by Michelle Krebs at 8:48 AM under Chrysler , Commentary , Companies | Comments (1) | digg this | Seed Newsvine

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