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HONG KONG (Reuters) – Daimler has asked Goldman Sachs to strengthen its stake in Chinese automaker BAIC Motor Corp., its main partner in a joint venture in China, said two people know the case.
The Daimler is seen at a press conference during the second press day of the Paris Auto Show, Paris, October 3, 2018. REUTERS / Regis Duvignau
An agreement would be only the second, as the world's largest auto market relaxed foreign ownership rules last year.
Daimler's rival, BMW, was the first to take advantage of these changes when it decided in October to take control of its business with Brilliance China Automotive Holdings Ltd for 3.6 billion euros (4.08 billion of dollars).
The caps on foreign ownership previously prevented foreign car manufacturers from controlling a Chinese manufacturer or joint venture with foreign peers. Last year, these limits were removed for manufacturers of fully electric and hybrid vehicles, which will be followed in 2020 by removing the limits imposed on manufacturers of commercial vehicles such as trucks and buses.
By 2022, the limits will be lifted in the wider automotive market. The agreement between Brilliance China and BMW will only take effect then.
The discussions between Daimler and BAIC are at an early stage and his plan to increase his stake in the Hong Kong listed entity of BAIC has not been finalized and could change later, warned the people, who have refused to identify because the information is confidential.
Daimler holds 30.4% of the shares of BAIC listed in Hong Kong, representing a 9.55% overall stake in its Chinese partner, according to the interim report issued by BAIC in June 2018.
The public group BAIC and the steel giant Beijing Shougang respectively hold 42.6% and 12.8% of BAIC in its national non-marketable shares.
It is not clear if Daimler would like to get a majority stake in BAIC, whose current market capitalization is $ 4.9 billion.
Daimler declined to comment on speculation regarding his partnerships. BAIC, based in Beijing, did not respond to a request for comment. Goldman declined to comment.
Daimler holds a 49% stake in Beijing Benz Automotive Co, its largest joint venture with BAIC, and 3.93% of Beijing Electric Vehicle Co., a subsidiary of BAIC. He also has a small joint venture with new energy vehicle manufacturer BYD.
He is also setting up a joint venture in China with the Geely group, Reuters reported in October. Geely bought a 9.69% stake in Daimler in early 2018 and requested an alliance.
Last year, Daimler sold 653,000 cars in China, its largest market in the world.
Two different people familiar with the case said that Daimler still wanted to increase its 49% stake in Beijing Benz Automotive. One of them, he had talks with BAIC last year, but those who failed early this year.
In early December, BAIC denied a Bloomberg report that Daimler had considered increasing its stake in Beijing Benz to at least 65 percent.
Report by Kane Wu and Julie Zhu in Hong Kong and Yilei Sun in Beijing; Other reports by Arno Schuetze and Edward Taylor in Frankfurt; Edited by Kim Coghill
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