DaimlerChrysler Sells 10.5 Percent Stake in Hyundai, Expects to Raise More Than $900M

FRANKFURT, Germany August 16, 2004; David Mchugh writinf for the AP reported that DaimlerChrysler AG said Monday it has sold its 10.5 percent stake in South Korea's Hyundai Motor Co., a move it expects will raise more than $900 million.

DaimlerChrysler bought the stake for $484 million in 2000 and 2001, spokesman Toni Melfi said. The sale was expected after the two companies said earlier this year they wanted to scale back their relationship.

Melfi said existing cooperation between the two companies would continue, including a joint purchasing project and plans to build a new four-cylinder engine together with Mitsubishi. DaimlerChrysler will also go on supplying Hyundai with its OM906 six-cylinder engines for use in medium buses.

"All the projects will go on," Melfi said.

The stake was sold in a transaction handled by Goldman Sachs, and it was "too soon" to say who bought the shares, Melfi said.

The two carmakers' relationship cooled amid the German automaker's plans to build Mercedes-Benz cars in China in partnership with Beijing Automotive Industry Holding Co. Hyundai said that violated its own agreement with Beijing Automotive, which Hyundai said had agreed not to enter into other joint ventures until its deal with Hyundai expired.

DaimlerChrysler bought the stake as part of CEO Juergen Schrempp's effort to build a global auto powerhouse with a presence in all major markets. But the company's strategy in Asia began to come undone with losses at Mitsubishi Motors, where DaimlerChrysler had a 37 percent stake. That holding has been diluted to under 25 percent after DaimlerChrysler cut off further investment and Mitsubishi carried out a capital increase.

DaimlerChrysler shares rose 98 cents, or 2.4 percent, to close at $42 Monday on the New York Stock Exchange.