March 23, 2009 / 4:54 AM / 11 years ago

Daimler capital hike to make Abu Dhabi biggest investor

FRANKFURT/BERLIN (Reuters) - Daimler (DAIGn.DE) will raise 1.95 billion euros ($2.67 billion) in fresh capital through the sale of a 9.1 percent stake to Abu Dhabi’s Aabar Investments PJSC AABAR.AD, the two companies said on Sunday.

Some 96.4 million new shares will be issued to Aabar for a price of 20.27 euros each through a 10 percent capital increase that excludes subscription rights for existing shareholders.

The dilution means Emirate of Kuwait stake shrink to 6.9 percent from a previous 7.6 percent, and Aabar would eclipse it as Daimler’s largest investor.

“We are delighted to welcome Aabar as a new major shareholder that is supportive of our corporate strategy,” Daimler Chief Executive Dieter Zetsche said in a statement.

“We look forward to working together to pursue joint strategic initiatives,” he added.

Daimler has repeatedly been a subject of takeover speculation in the past since it is one of the only major carmakers in the world without a protective shareholder.

Some analysts therefor have believed the massive crisis in the auto industry might encourage Daimler to boost its size via an acquisition or a cross-shareholding with another rival such as BMW (BMWG.DE).

Formerly called Aabar Petroleum Investments Company PJSC and founded in early 2005, the Abu Dhabi-based company explored oil and gas in Southeast Asia before selling off in 2008 core units like Pearl Energy Limited and Dalma Energy LLC that it had only acquired a couple of years earlier.


Aabar has since branched out into real estate and financial services, recently buying AIG Private Bank for 407 million Swiss francs ($363.7 million) in equity and debt and taking a 3.3 percent stake in Italian toll road operator Atlantia (ATL.MI), formerly known as Autostrade.

A fraction the size of Daimler, Aabar has total assets of some $922 million and a market cap of just 1.58 billion dirhams.

While Abu Dhabi Investment Company (ADIC) and Mubadala Development Company were among the founding investors, Aabar is now controlled by the Abu Dhabi state-owned International Petroleum Investment Company (IPIC).

“Daimler is an iconic brand and a financially strong company with a reputation for excellence worldwide,” Aabar Chairman and IPIC managing director Khadem Al Qubaisi said in a statement. “We are delighted to have received the opportunity to be making this investment.”

Daimler and Aabar also plan to cooperate three different areas: electric vehicles that would reduce carbon emissions, developing innovative compound materials to be used in automotive manufacturing, and social projects in Abu Dhabi to educate young talent for positions in the car industry.

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