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Benz it like Beckham

Sheikh up: Daimler AG has a new major shareholder, from Abu Dhabi.

Stock market thumbs-up as Abu Dhabi football fan becomes Daimler’s biggest investor

Mercedes-Benz logo24 Mar 2009

MERCEDES-Benz parent company Daimler AG on Sunday announced a new major shareholder in the form of a Middle East company controlled by the man who recently bought the Manchester City football team.

Abu Dhabi company Aabar Investments paid €1.95 billion ($A3.77 billion) for a 9.1 per cent stake in the German car-maker, replacing another Middle East investor, the Emirate of Kuwait, as Daimler’s biggest shareholder.

Daimler’s stock value rose on news of the new investment, which gives the company fresh capital, gaining 6.26 per cent on the Frankfurt exchange on Monday morning before easing later in the day to close two per cent up.

However, Daimler shares have lost about 60 per cent of their value in the past 12 months, at least partly because it still holds 19.9 per cent of Chrysler, which could cost Daimler several billion euros if it goes bankrupt.

Billionaire Sheikh Mansour Bin Zayed Al Nahyan – who is a member of the Abu Dhabi royal family, the brother of the country’s president and is married to the ruler of Dubai’s daughter – bought the famed Manchester City football club in September last year for about $A400 million.

He controls Aabar Investments through its biggest stakeholder, the government-owned International Petroleum Investment Company (IPIC), of which he has been chairman since 1994.

A cabinet member of the United Arab Emirates, the Sheikh’s personal fortune is estimated by Forbes magazine at $A6.9 billion.

Aabar Investments was issued 96.4 million new shares to increase Daimler’s capital, dropping the Kuwaiti holding from 7.6 to 6.9 per cent.

Analysts believe the investment was engineered by Daimler to protect it from a hostile takeover as it was one of the few European car-makers that was not secured by a major core shareholding.

However, they say the move suggests Daimler needs capital more urgently than widely realised and that the company’s current cash burn rate could absorb the new investment by the end of June unless market conditions improve dramatically.

 center image Left: Daimler CEO Dieter Zetsche.

Although there was no mention of the new investors taking a seat on Daimler’s supervisory board, Daimler CEO Dieter Zetsche said the company would work closely with Aabar.

“We are delighted to welcome Aabar as a new major shareholder that is supportive of our corporate strategy (and) look forward to working together to pursue joint strategic initiatives,” said Dr Zetsche in a statement.

These joint initiatives will include development of electric vehicles aimed at reducing CO2 emissions, innovative compound materials to be used in automotive manufacturing, and establishing a training centre in Abu Dhabi to educate young people for positions in the industry.

Aabar chairman Khadem Al Qubaisi (a former IPIC managing director) said Daimler was an iconic brand and a financially strong company with a reputation for excellence worldwide.

“We are delighted to have the opportunity to make this investment and are excited by the commercial potential of our partnership,” said Mr Al Qubaisi.

“We believe that our future co-operation will be beneficial for Aabar and create social and economic benefits for Abu Dhabi and the United Arab Emirates. We look forward to working with Daimler to fully realise these opportunities.”

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