Too tempting

Sources: China’s Geely buys shares in Mercedes-maker Daimler

Electric Vehicle Infrastructure in China’s Ningde
Geely up. Source: Bloomberg

The founder of Chinese carmaker Geely, Li Shufu, has never hidden his fondness for Mercedes-Benz cars: Geely’s first vehicle, which hit the market in 1998, was a bad copy of a Mercedes model.

Mr. Li, now heading China’s largest maker of electric cars, is now buying up shares in Daimler, financial sources told Handelsblatt. The German carmaker would welcome any investor with a long-term focus, people familiar with the company said. Daimler’s boss Dieter Zetsche has already met with Mr. Li, Handelsblatt has learned.

Both Daimler, based in Stuttgart, and Geely declined to comment when contacted by Handelsblatt. Chinese finance website JRJC had reported earlier on Friday that the Asian firm was looking into buying a stake of 3 to 5 percent in Daimler, the world’s largest maker of luxury cars, ahead of BMW and Audi. As soon as Geely owns 3 percent or more it has to file a notification to Germany’s financial regulator, Bafin, and Daimler. These filings are public.

Geely, which bought Swedish carmaker Volvo from Ford in 2010, tried in November to buy a stake in Daimler in the form of convertible debt, sources told Handelsblatt. Reuters also reported this in November. Daimler, however, refused the deal, which would have been worth more than €1 billion and would have entailed a capital increase and a discount to the share price. The German carmaker suggested Geely could buy shares on the open market.

The Chinese company apparently took this advice, though its strategy remains unclear. But Geely could be working to build up a global automotive empire. In addition to Volvo, it owns Malasian carmaker Proton, British sports car brand Lotus and the maker of British taxis. In December, Geely also acquired an 8.2 percent stake in truck maker Volvo, which is separate from the passenger car brand.

Markus Fasse writes about the aviation and automobile industry. Sha Hua is Handelsblatt’s correspondent in Beijing. To contact the author: fasse@handelsblatt.com and hua@handelsblatt.com

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