Daimler does not believe that the entry of Chinese capital into its shareholding is a hostile move

The surprise financial move that has allowed the chairman of the Chinese automotive group Zhejiang Geely Holding Group to enter the capital of the Daimler Group and position himself there as the reference shareholder with 9.67% of its shares in his possession is not considered by Daimler Group chief executive Dieter Zetsche as a hostile move that could go further in the future and generate internal struggles for control of the German company.

In statements made by the chief executive of the German automotive group at the Beijing Motor Show, Zetsche does not view the use of fictitious Hong Kong companies, derivatives companies, bank financing and carefully structured options to keep secret the plans for entering the capital of the Daimler Group carried out by Li Shufu, chairman of the Geely automotive group, as a hostile move that conceals a desire to take control of it. “We have no indication of plans for a hostile takeover, therefore, we do not need any specific plan to protect ourselves against it,” Zetsche declared to the media present at the Beijing Motor Show.

Li Shufu’s rapid and meticulous move in the market generated strong fears in Germany over the possibility that the main and most valuable German business assets could end up in the hands of foreign countries, especially China. The German government urged the main German high-tech companies to monitor the constant increase in their companies’ shares held by Chinese capital, warning that the loss of key technologies that these movements could lead to could severely damage the country’s economy. Li’s manoeuvre raised particular suspicions because the purchase had not been carried out within the usual communication margins for this type of business move.

After Li Shufu’s entry into Daimler’s capital, Zetsche and the Chinese tycoon held a meeting in which the Chinese tycoon reportedly confirmed his intention to “not go any further” in his capital stake in the German automotive group. Shufu invested 9,000 million euros in the purchase of approximately 9.7 percent of Daimler’s capital, a move carried out with extreme secrecy that has surprised all financial circles and raised great suspicions in Western governments.

Zhejiang Geely Holding Group and Li Shufu control an important and growing conglomerate of brands linked to the automotive sector in China, among which have also been integrated Volvo Cars, Proton, Lotus and LEVC, the manufacturer of the London black cabs. Recently, it also acquired a major stake in the capital of Volvo Trucks for 3,300 million dollars.