Daimler and Beijing Auto Exchange Play "Capital Game"

Daimler and BAIC recently signed a strategic cooperation agreement in Germany and reached three major capital cooperations: Daimler’s purchase of 12% equity of Beijing Automotive, Beijing Auto's shareholding in Beijing’s Mercedes to 51%, and Daimler’s new The number of shares in the Beijing Benz Auto Sales Co., Ltd. established increased to 51%. Behind the dazzling array of capital operations, BAIC and Daimler fulfilled their respective requirements: Beijing Automotive gave up its Mercedes-Benz sales rights, but through the holding of Beijing Benz, it consolidated its financial statements and paved the way for the listing of BAIC. Daimler not only benefited from the investment in Beiqi, but also gained two seats on the latter’s board of directors, which indirectly boosted his right to speak in the joint venture.

For the first time, foreign capital shares in local car companies

It is reported that a series of cooperation between Daimler and BAIC Group will still be subject to government approval. It is expected that the cooperation between the two sides will be completed at the end of this year or early next year.

After years of joint ventures and cooperation, the domestic automobile industry has already entered the "post-joint venture era." Nevertheless, the cooperation between Daimler and BAIC is still an innovation. Daimler will spend 640 million euros to increase its 12% stake in Beijing Auto Co., Ltd. Once the deal is completed, Daimler will become the first foreign automaker to take a share of the Chinese automaker.

In return, Daimler promised to let him out of its 1% stake in Beijing Benz, a joint venture with BAIC. Among the joint stock companies whose shares are relatively equal, the 1% stake is very critical, which not only determines which party will have the right to speak of the joint venture company, but more importantly, it will clear a major obstacle to the listing of BAIC shares.

According to China's existing accounting standards, a large company holding a 50% stake in a joint venture company, its profits can only be classified as "investment income" in the financial statements, and its attractiveness to investors is limited; once the holding is achieved, the business of the joint venture company is Become a main company "main business".

After Beiqi Co., Ltd. achieved control over Beijing Benz, it will open the channel for the former to go to the IPO in Hong Kong. Because the current main business of Beiqi Co., Ltd. is only its own brand, the brand is still in the investment period, and the profit is far behind in the future. After Beijing Benz is transformed into the “main business”, it will greatly enhance its asset attraction, so that Beiqi’s IPO plan will become may.

Daimler does not suffer

The strategic cooperation seems to be more favorable to BAIC, but Daimler will also benefit from the cooperation. First of all, by participating in the shares of Beiqi, helping the latter to achieve IPO, it is still just a good deal from the perspective of investment. According to informed sources, Beiqi has already hired brokerages Goldman Sachs and Morgan Stanley to prepare for listing. This year's plan to go to Hong Kong for listing is to raise funds in excess of US$1 billion. The purpose is to develop self-owned brand cars.

Secondly, Daimler acquired 12% of the shares and two board seats in Beiqi Co., Ltd., and Beijing Auto is a controlling shareholder of Beijing Benz, holding 51% of its shares. It seems that Daimler’s actual practice in Beijing The right to speak is increasing. "Daimile was a Mercedes-Benz company in Beijing. One was to obtain a 49% equity gain from the Ming Dynasty and at the same time obtain a 6% gain from the shareholders of Beiqi." Zhang Zhiyong, an expert in the automotive industry, pointed out that this is for Daimler. Say no loss.

Also not to be overlooked is that BAIC has sold a 1% stake in the newly established joint venture sales company, Beijing Benz Automobile Sales Company. This means that Daimler has fully mastered the sales power of domestic Mercedes-Benz, in the future under the leadership of Daimler, will truly achieve the unity of domestic and imported Mercedes-Benz marketing channels.

Even analysts familiar with German companies have suggested that practical Germans have no real advantage and generally do not make concessions.

Uncertainty in cooperation still exists

At present, Daimler's innovative cooperation with BAIC still has many uncertainties. Xing Haizhi, an analyst at Cinda Securities Automotive Industry, pointed out that the "red line" of 50% of foreign-owned brands in Sino-foreign joint venture car companies has not been liberalized, and that Daimler's actual equity income in Beijing Benz will exceed 50%. There are still doubts about obtaining approval from the competent authorities.

In addition, the cooperation between Daimler and BAIC is also facing the technical cooperation. In order to introduce high-end autonomous products as soon as possible, BAIC requested Daimler to transfer the Mercedes-Benz E Series platform and technology to Beiqi's own brand Beijing Automobile at no cost. Gu Lei, president of the Beijing Automotive Industry Research Institute, previously disclosed that the Beijing auto flagship product C90 basically gave up the Saab platform, while analysts from the C90 and Mercedes-Benz E series similar rear drive design, inferred that the C90 platform is likely to come from Mercedes-Benz. From this point of view, Daimler and Beiqi have reached a series of agreements. However, due to the existence of Saab, the two sides still have uncertainties in technical cooperation, and it is not yet time to “consider”.

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