Daimler To Sell About $2.7 Billion in Shares to Oil Rich Abu Dhabi's Aabar Investments

BERLIN March 22, 2009; Matt Moore writing for the AP reported that OPEC cornerstone Abu Dhabi is poised to become the biggest shareholder in Daimler AG after the German maker of luxury cars, buses and trucks said it would sell nearly euro2 billion ($2.72 billion) in shares to the country's Aabar Investments PJSC.

In a statement released Sunday by the Stuttgart-based company, Daimler said Aabar will buy 96.4 million new Daimler shares at a price of euro20.27 ($27.87) each, which is slightly below the euro21.34 shares fetched at the close of trading Friday in Frankfurt.

The move will give Aabar a 9.1 percent stake in Daimler, bigger than the 6.9 percent stake held by Kuwait.

Aabar's biggest shareholder is the International Petroleum Investment Co., which in turn is owned by the Abu Dhabi government.

In December, American International Group Inc. agreed to sell its wealth management arm AIG Private Bank Ltd. to Aabar. (I wonder who made this decision and how it screwed the U.S citizens...any ideas? msnide@theautochannel.com

"Daimler is an iconic brand and a financially strong company with a reputation for excellence worldwide," Aabar Chairman Khadem al-Qubaisi said in a statement. "We are delighted to have the opportunity to make this investment and are excited by the commercial potential of our partnership."

Daimler and Aabar plan to work together on cooperation aimed at developing electric vehicles and materials for auto production as well as establishing a technical training center in the emirate to train students for careers in the automotive industry.

"We are delighted to welcome Aabar as a new major shareholder that is supportive of our corporate strategy. We look forward to working together to pursue joint strategic initiatives," Daimler said in a statement.

The investment comes at a crucial time for the company and the entire auto industry. Daimler posted a fourth-quarter loss of euro1.5 billion last month -- its first in two years -- and warned that sales of its marquee Mercedes-Benz cars would decline through 2009 because of the economic meltdown's pinch on the automotive industry.

The nearly $2 billion loss for the maker of Mercedes-Benz, Smart and Maybach, as well as trucks and buses, compared to a profit of euro1.7 billion a year earlier. The final figure was dragged down by losses and charges at Chrysler LLC, of which Daimler holds a 19.9 percent stake.

Daimler Press Release

Stuttgart March 22 2009- Daimler AG (stock-exchange abbreviation DAI) welcomes Aabar Investments PJSC (Aabar) of Abu Dhabi, as a major investor. Daimler increases the share capital by approx. 10% with exclusion of subscription rights of existing shareholders. After acquiring all new shares, Aabar will hold approx. 9.1% of the new share capital. The capital increase was approved by Daimler’s Supervisory Board today.

Aabar is an investment company headquartered in Abu Dhabi and is listed on the Abu Dhabi Securities Exchange. It directly invests in various sectors including energy, infrastructure, real estate, automotive and financial services companies. Its largest stakeholder is International Petroleum Investment Company (IPIC), which in turn is wholly owned by the Government of the Emirate of Abu Dhabi.

The capital increase will be carried out by issuing 96,408,000 new registered no par value shares from Daimler’s Authorised Capital approved by the Annual Shareholders’ Meeting of April 9, 2008 in exchange for cash contributions. Existing shareholders’ rights to subscribe to these new shares are excluded. The issue price of the shares is EUR20.27 per share, resulting in an equity contribution to Daimler of EUR 1,954,190,160. The cash inflow from the capital increase of EUR1.95 billion will further improve Daimler’s sound financial position. At the end of 2008, the equity ratio of Daimler’s industrial business was 42.7% and the equity ratio of the entire Daimler Group was 24.3%.

Daimler and IPIC have also agreed on a strategic cooperation in the framework of which they intend to pursue joint initiatives in the areas of electric vehicles, development and production of innovative compound materials for use in automotive manufacturing as well as social projects.