Daimler declines Geely offer to buy stake but Geely is still positive

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Daimler has declined an offer from China’s Geely to take a stake of approximately 5 percent by means of a discounted share placement, as the German automaker has long hesitated to see existing shareholdings diluted, sources with understanding of the discussions stated.

A stake of that size valued at $4.5 billion at current market value. Although Daimler turned down the deal, it informed Geely it was welcome to purchase shares in the open market, the sources added.

Automakers in China have started a flurry of dealmaking, as they scramble to enhance production of electric and plug-in hybrid vehicles ahead of tough new quotas to be enforced by Beijing, which wants to decrease urban smog and lower the nation’s dependence on oil.

Individuals with knowledge of Geely’s thinking stated the company was keen to access Daimler’s electric automobile battery innovation and wanted to establish an electric vehicle joint venture in Wuhan. Geely, which also owns Volvo, is still enthusiastic it can secure a deal in some type over the coming weeks, they added.

The two automakers met in Beijing in recently at Geely’s behest. In Beijing, the Geely Holding Group offered to take a stake of between 3 percent and 5 percent if Daimler would provide new shares at a discount rate, the sources stated.

It was not instantly clear exactly what sort of discount rate for the shares Geely had in mind or whether Geely had an interest in purchasing the shares on the open market.

A spokesperson for Geely refused to comment. A representative for Daimler said the company was extremely “pleased with our shareholder structure at present”, however added that it would invite new financiers with a long-lasting interest in the company.

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