Daimler to spin off truck business [Feb 18, 2021]
Daimler to spin off truck business: To focus on Mercedes-Benz luxury electric vehicles
The parent company of Mercedes-Benz, Daimler has decided to spin off its Daimler Trucks vertical as a separate entity. The company believes that this step will enable the brand to increase its investor appeal as a focused electric, luxury car business
German carmaker Daimler said it plans to spin off Daimler Truck, the world’s largest truck and bus maker, as it seeks to increase its investor appeal as a focused electric, luxury car business, sending its shares up nearly 9%.
Daimler’s decision to break itself up follows the example of other German companies, such as Siemens AG, after investors pressed boards to break up conglomerates.
It also highlights efforts by the Mercedes-Benz luxury car brand to challenge Tesla Inc, Porsche, BMW and others in the market for electric, premium vehicles.
“This pure play luxury car company is even more attractive to investors who seek a return in that area,” Chief Executive Ola Källenius said during a conference call Wednesday.
Källenius said he expects the standalone Mercedes-Benz business will be seen as competitive with Tesla, and over time earn a higher valuation from investors.
A final decision on the separation will be taken at an extraordinary shareholders’ meeting that could be held at the end of the third quarter and the business could be listed on the Frankfurt stock exchange by the end of 2021, Daimler said.
Analysts said the break-up was logical and the truck business did not add to Daimler’s share price.
“The outcome is extremely positive for all shareholders,” Bernstein analyst Arndt Ellinghorst wrote in a client note, adding there was “very little industrial and cultural logic for combining these two very different businesses”.
Daimler Truck delivered around half a million trucks and buses to customers in 2019 and generated 40.2 billion euros ($48.34 billion) in revenue from trucks and 4.7 billion euros from buses.
In the truck market, Daimler faces traditional rivals such as Sweden’s AB Volvo, Volkswagen AG unit Traton and Paccar Inc
It has been racing to bring to market fully-electric heavy-duty trucks to compete with Tesla’s long-awaited Semi truck model.
Heavy truck makers are investing more in hydrogen fuel cell technology to replace internal combustion engines. Luxury vehicle makers are focused on batteries.
Under the planned spin-off, a significant majority stake in Daimler Truck would be distributed to Daimler shareholders.
Daimler shares closed up 8.91% at 64.56 euros on Wednesday.