A falling share price means Daimler is an attractive target for a takeover, write Daniel Schäferand John Reed
GERMAN CARMAKERS Daimler - owner of Mercedes - and BMW compete head-to-head in many areas, but there is at least one area where Dieter Zetsche, Daimler's chief executive, can clearly envy his rivals in Munich.
Unlike BMW, which has the Quandt family as controlling shareholders, the Stuttgart-based company is the only European carmaker that lacks an anchor investor who could, if called on, fend off unwanted advances from corporate raiders.
Since Daimler sold loss-making Chrysler last year, Mr Zetsche has faced questions about how long the highly profitable maker of Mercedes and Smart cars and owner of the world's largest truck group can remain independent.
The speculation has intensified in Germany recently following the audacious move by Schaeffler, the privately owned maker of ball bearings and car parts, to take over its larger rival Continental.
The flames were further fanned after Daimler warned on profits last month. Rising fuel prices and a grim outlook for the car industry have pushed its share price down by more than 45 per cent in the past 12 months, reducing its market value to €40 billion.
Unlike Schaeffler's bid for Continental, mostly accepted with equanimity in Germany, an approach on Daimler would likely face resistance from regulators, analysts say. Its stake in aerospace giant EADS would likely make any foreign takeover attempt a matter of national interest.
However, analysts also note that an opportunistic investor could attack Daimler very easily, given the notoriously weak attendance at shareholders' meetings in Germany.
"If you have €5 billion and a bit of leverage, you could get a controlling stake," says one.
A spokeswoman for Daimler said: "We do not see ourselves as a takeover candidate, but we cannot totally exclude the possibility. We have no indications that an investor is building a large stake."
Daimler's only large shareholder is the Emirate of Kuwait, with a stake of 7.6 per cent as of the end of April. The rest of its stock is free float, split between institutional and private investors.
A new investor might be lured to strip Daimler of its €8.8 billion of net liquidity or to split off the truck division.
In an interview with the Financial Times last year, shortly after the Chrysler sale, Mr Zetsche said Daimler felt "dramatically less vulnerable" to a takeover than before the sale, but added: "There's no certainty, never in business."
At the time, Mr Zetsche also dismissed the notion of hiving off the trucks business. "I don't see a benefit for the majority of our shareholders - other than the ones who have a three-month perspective - in splitting the company."
Today, people close to Daimler's management say they are "very concerned", but have not officially given either of their closest banks - Deutsche Bank and JP Morgan - a defence mandate as this could be interpreted as a sign of weakness.
However, rumours in the media about activist hedge funds buying shares weeks seem to be baseless. "We do not see any changes in the shareholder structure," says a banker close to Daimler.
Potential buyers might come from emerging markets or even Daimler's home turf with some analysts suggesting it would be a daring but wise buy for BMW's owners.
- Financial Times Service