Daimler investors approve plan to separate Mercedes from trucks

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Daimler shareholders voted in favor of a plan to split the sprawling heavy-truck division of Mercedes-Benz luxury car operations in a move to increase the valuation of both companies.

With 99.9% of the vote, nearly all investors approved the proposed deal, Daimler supervisory board chairman Bernd Pischetsrieder said at an extraordinary general meeting of shareholders on Friday.

The move is designed to make businesses respond more quickly to industry trends such as battery power and autonomous driving, ending more than a century of operation under one roof.

“Until now, we have had to orient ourselves on the route taken by our automotive colleagues. In the future, we will be able to plan our own route and choose the path that suits us best,” said Martin Daum, CEO of Daimler Trucks at the meeting.

Spin-offs have been an important way for large companies to unlock value and respond to investors demanding a more precise business model.

The luxury automaker, which will be renamed Mercedes-Benz Group from next February to reflect its focus on the car and van industry, expects the spin-off truckmaker to join it on the DAX list of 40. largest German companies in the first quarter of 2022.

Daimler Trucks reported a profit margin of 8.2% in the second quarter of this year, recovering to pre-pandemic levels but still below rivals including Scania from Traton and Volvo Trucks from Volvo Group. Before the pandemic, Daimler Trucks generated around 40 billion euros ($ 46.33 billion) in annual revenue with profits of around 2 billion.

Margin targets

The truck maker will focus on growing its high-margin heavy-duty truck business, CEO Daum said, and is betting on a mix of battery-powered and hydrogen-powered electric vehicles to meet its CO2-neutral production target by here. 2039.

It expects an annual return on sales of between 6% and 7% in 2021, rising to 8% to 9% in a more favorable market environment, said Daum, below the expected return of Daimler for its business. cars and vans from 8% to 10%.

Daimler shares rose 1.3% to 77.70 euros in Frankfurt, valuing the automaker at 83.1 billion euros ($ 96.4 billion).

The truck spin-off is the most important strategic step for Daimler since the sale of Chrysler in 2007 and a key part of CEO Ola Kallenius’ push to transform the luxury car maker into a more agile company.

Daimler’s earnings and stock price began to languish at the end of his predecessor Dieter Zetsche’s 13-year rule, forcing Kallenius to make bold changes as fundamental changes swept the industry.

Mercedes plans to retain a 35% stake in its truck company.

Strategy update

The trucking management will brief investors on the strategy next month and trading in the new shares is scheduled to begin in December.

“We expect the capital markets day in November to be a catalyst for stocks and truck and bus stocks to trade well immediately on the market,” said Tom Narayan, analyst at RBC Capital Markets , in a recent report.

Daimler has its roots in the inventors of the automobile. In 1886, Carl Benz filed a patent for his gasoline vehicle, while Gottlieb Daimler separately designed a motorized cart. The two entrepreneurs continued to develop passenger cars as well as commercial vehicles.

Bloomberg and Reuters contributed to this report


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