The new trucks division that Daimler wants to spin off later this year will have a 35 per cent belonging to the parent company, said the luxury carmaker said on Friday.
This information was shared by the company on a landmark corporate split that Daimler hopes will cause a surge in its share values.
The company had first announced the spinoff of Daimler Truck Holding AG as a separate listed entity in February and the move is expected to be voted upon by the company’s shareholders at an extraordinary general meeting on October 1.
According to the plans of Daimler, its shareholders will be awarded one share in the trucks division for every two Daimler shares that they own.
In turn, Daimler will be renamed as the Mercedes-Benz Group AG which is aimed to the company’s new focus on its car and van business, including its Mercedes-Benz brand, and to the plans of the company to rival the United States based electric car maker Tesla and other firms in the EV segment in the area of premium electric cars.
“Daimler’s realignment makes one success story into two,” Daimler Chief Executive Ola Kaellenius said.
“With this courageous step into a new future, we are creating added value with two pure-play companies for our customers, employees, shareholders and partners.”
Net liquidity of 5 billion euros ($5.9 billion) until the end of the year will be provided by Daimler to Daimler Truck Holding AG to ensure that the new company gets an investment-grade rating. It is expected that the truck division will start publicly trading by the end of the year.
One of the popular ways for large corporations to unlock value and address investors’ demands of creating a leaner and sharper business model is spin-offs which is a system in which the existing shareholders of a company get shares in the new vehicle for free.
Daimler shares are up about 17% since the spin-off announcement, in line with the broader European automotive sector.
“Up until now, we had to travel in a convoy. In the future, we will be able to plan our own route and choose the best route for us,” said Martin Daum, designated chief executive of Daimler Truck Holding AG.
5 per cent of the 35 per cent stake that Daimler plans to retain in the new trucks division will be transferred to the pension fund of Daimler. The company is the largest truck and bus maker of the world and the new truck company is also expected to be a contender for Germany’s blue-chip DAX index.
Daimler Truck Holding AG shareholders’ equity on a pro-forma basis stood at about 11.1 billion euros as of January 1, 2021, and is equivalent to an equity ratio of 22 per cent, Daimler said
(Adapted from GulfToday.com)