© Reuters. File photo: The Daimler AG logo was photographed at the IAA Truck Show in Hanover, Germany on September 22, 2016. REUTERS/Fabian Bimmer
FRANKFURT (Reuters)-Daimler said on Friday that Daimler will retain a 35% stake in the truck division it plans to spin off this year, and provided more details on the landmark corporate spin-off. It Hope this will increase the value of the stock.
The spin-off of Daimler (OTC:) Truck Holding AG as an independent listed entity was first announced in February and will be voted on by Daimler shareholders at the extraordinary general meeting on October 1.
For every two Daimler shares they hold, they will get a share in the truck division.
In turn, Daimler will change its name to Mercedes-Benz Group AG to reflect its focus on the automotive and van business, including the Mercedes-Benz brand, and its efforts to challenge Tesla (NASDAQ stock) Code:) and other competitors in the electric premium car market.
“Daimler’s reorganization turned one success story into two,” said Daimler CEO Ola Kaellenius.
“As a brave step into a new future, we are working with two pure companies to create added value for our customers, employees, shareholders and partners.”
Daimler will provide 5 billion euros (5.9 billion U.S. dollars) of net working capital to Daimler Truck Holdings AG until the end of this year and the truck manufacturer’s stock is expected to start trading in order to obtain an investment grade rating.
Spin-off, that is, free stocks of new cars for existing shareholders, has always been an important way for large companies to release value and respond to investors’ demands for a clearer business model.
Since the spin-off announcement, Daimler’s share price has risen by approximately 17%, in line with the broader European automotive industry.
Martin Daum, designated CEO of Daimler Trucks Holdings, said: “So far, we have had to travel in the form of a fleet. In the future, we will be able to plan our own routes and choose the most suitable route for us.”
Daimler plans to retain a 35% stake in the division, which is the world’s largest truck and bus manufacturer and will become a competitor to German blue-chip stocks, of which 5% will be transferred to the car manufacturer’s pension fund.
Daimler stated that as of January 1, 2021, the pro forma shareholder equity of Daimler Truck Holding AG was approximately 11.1 billion euros, equivalent to a 22% equity ratio.
(1 USD = 0.8418 Euro)
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