China’s BAIC in talks to take Daimler stake

Chinese auto maker BAIC Motor (1958.HK) is in talks with Daimler AG (DAIGn.DE) about taking a stake in the German luxury car maker, two sources with knowledge of the matter told Reuters on Thursday.

Daimler already owns a 10 percent stake in BAIC, the Hong-Kong listed unit of China’s Beijing Automotive Group (BAIC) [BEJINS.UL], and talks on BAIC’s investment in the German carmaker are ongoing, the sources said.

If talks are successful, BAIC will be the third Chinese auto maker to invest in a foreign car manufacturer, after Dongfeng Group (0489.HK) took a stake in PSA Peugeot Citroen (PEUP.PA) and SAIC Motor bought shares in General Motors (GM.N).

Shares in Daimler were up 3.8 percent by 1328 GMT, outperforming a 2.8 percent rise in Germany’s DAX .GDAXI.

In recent years, Daimler and BAIC have formed joint ventures in China to oversee production and sales of Mercedes-Benz passenger cars in the world’s largest car market.

Taiwan’s Want China Times reported that BAIC chairman Xu Heyi had confirmed on Monday that the two sides were in talks and that he expected an outcome by the end of the year.

If a deal is completed BAIC will become one of Daimler’s top shareholders, the Want China Times reported.

Daimler’s largest shareholders are currently Renault-Nissan (RENA.PA) (7201.T) with a 3.1 percent stake and Kuwait’s investment authority, which has 6.8 percent.

Daimler AG earlier on Thursday signaled it was open to welcoming new long-term shareholders from China.

Responding to a Chinese media report, which said Beijing Automotive was in talks to buy a major stake in Daimler, the German carmaker said it was happy with its current shareholder structure but said it was always pleased about interest from potential long-term investors.

“BAIC is our most important partner in China,” Daimler said. “Generally speaking we want to remain attractive for long-term investors. Investors from China are also welcome.”

Ties between the two have deepened in recent years. In December 2013, BAIC took a 51 percent stake in a China-based manufacturing joint venture with Daimler, while the German automaker took a 51 percent stake in a China-based sales joint venture.