October 22, 2014 / 10:16 AM / 6 years ago

UPDATE 2-Daimler eyes $780 mln boost from surprise sale of Tesla stake

* Daimler sells down 4 pct Tesla stake

* Daimler says technological cooperation not impacted

* Stake sale to bring 2014 EBIT gain (Adds analyst comment, valuation multiples)

By Edward Taylor

FRANKFURT, Oct 22 (Reuters) - Daimler AG will book a $780 million windfall from the sale of its four percent stake in U.S. electric car maker Tesla Motors, a move late on Tuesday that surprised investors and fuelled speculation of a growing rivalry.

The maker of Mercedes-Benz cars invested in Tesla in 2009 as a way of securing cutting edge battery technology. Tesla currently provides technology for the electric version of Mercedes Benz B-class cars and Smart cars.

Daimler has said that cooperation deal remains intact, arguing the shareholding was not necessary for it to continue working with the California-based firm. Tesla has not commented on the sale or future collaboration.

Analysts, though, said the sale could be read as a sign that the once-close partners now saw each other as rivals in the increasingly competitive electric car market.

“There is a difference between working together and partnership. In our view the ties between the two companies have loosened over time,” analysts at ISI Research said in a note.

Daimler took a 9.1 percent stake in Tesla Motors for around $50 million back in May 2009. As a result of capital increases, Daimler’s stake eventually decreased to around 4 percent.

At the time of the initial investment, Tesla was still a niche premium brand, and the shareholding provided the German auto maker with preferential access to the U.S. electric car maker’s technology.

However in June this year, Tesla said it would allow other rival carmakers to use most of its patents in the hope of advancing investments in electric vehicle technology — a step that may have made an exclusive partnership less attractive for Daimler.

Since 2009 demand for U.S. premium eco-cars has steadily risen. In the United States, the Tesla Model S outsold the old version of the Mercedes-Benz S-Class last year, analysts at ISI said.

CASH BOOST

While Daimler has not explained the timing of its sale, Tesla’s share price has been coming down in recent weeks. It was trading around $284 in early September and is down to around $235 in increasingly shaky markets.

Tesla still trades at a far higher multiple than its peers. Tesla’s price to earnings ratio is 77.11, compared with Ford Motor’s 9.42 and 9.19 for Daimler.

The sale of Daimler’s stake in Tesla will result in a cash inflow of around $780 million, boosting earnings before interest and taxes by a similar amount for 2014, the company said. Proceeds from the stake sale will be used to strengthen Daimler’s operational business, it added.

Based on Tuesday’s closing price of $235.34 for Tesla shares, and the 124.93 million shares outstanding, a 4 percent stake should yield around $1.17 billion.

Last December, Daimler hedged its holding in Tesla against a possible decline in the electric vehicle maker’s shares over the next three years, a step it justified on the grounds that it would help underline the long-term nature of the partnership.

On Tuesday, Daimler said it had closed the hedge.

Tesla supplies electric motors and batteries to Daimler for its Smart Fortwo electric vehicle (EV) and the new Mercedes-Benz B-Class electric vehicle.

Tesla began development of its first electric vehicle, the Roadster, in 2004 - the first US- and EU-certified lithium-ion battery electric car. It started delivering its second car, the Model S, the four-door saloon in 2012. (Reporting by Edward Taylor in FRANKFURT; Additional reporting by Bernie Woodall in DETROIT; Editing by Thomas Atkins and Clara Ferreira Marques)

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