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Aabar Gets $1.41b Capital Boost after Acquiring Major Daimler Stake
ABU DHABI - Aabar Investments PJSC received a $1.41 billion capital infusion from a company owned by the Abu Dhabi government, just a day after splashing out almost twice that amount to become the largest shareholder in German carmaker Daimler AG.
International Petroleum Investment Co., also called IPIC, completed a purchase of $1.41 billion in bonds that are convertible into ordinary Aabar shares, Aabar said on Monday.
The injection follows a smaller outlay of about $408 million that IPIC made to Aabar last month. Once IPIC converts all its shares, it will own 71 per cent of Aabar, almost doubling its current 36 per cent stake in the Abu Dhabi-based investment firm.
Aabar agreed to pay $2.67 billion for a 9.1 per cent stake in Daimler, in a deal that the companies announced late on Sunday. The acquisition is Aabar’s biggest overseas investment yet and propels Aabar past a Kuwaiti government investment fund, which holds a 6.9 per cent stake in Daimler, to become the German auto-maker’s largest shareholder. Daimler is best-known for its Mercedes Benz luxury cars.
Under the Daimler-Aabar deal, the two companies plan to jointly develop electricity-powered vehicles that would help minimize carbon dioxide emissions. They said they aim also to develop and produce innovative compound materials for use in automotive manufacturing.
Ben Burton, a spokesman for Aabar Investments, told the Khaleej Times from London that the two companies would set up an auto industry training centre for young people in Abu Dhabi. He did not provide any dates for the proposed initiatives, nor did he specify their planned location for manufacturing the environmentally-friendly electric cars.
Burton declined to comment on the possibility that Aabar might seek a seat on Daimler’s board.
Under the deal, which still must be approved by Daimler’s shareholders, Aabar will take the bulk of the 96 million new shares to be issued by Daimler at a price of 20.27 euros a share. Daimler’s shareholders will vote on the acquisition at an annual meeting on April 9.
“Daimler is an iconic brand and a financially strong company with a reputation for excellence worldwide,” Aabar Chairman Khadem Al Qubaisi said in a statement on Sunday.
“We believe that our future cooperation will be beneficial for Aabar and create social and economic benefits for Abu Dhabi and the UAE. … With this investment by Aabar, we have added a jewel to our crown,” he said.
Abu Dhabi has long aspired to set up an industry for manufacturing components and spare parts for the automobile industry at its planned Khalifa Port and Industrial City in Taweelah, where large-scale steel and aluminium manufacturing plants are being established.
“We are delighted to welcome Aabar as a new major shareholder that is supportive of our corporate strategy,” Daimler Chairman Dieter Zetsche said in the joint statement.
Daimler sold off most of its stake in the third-largest US car-maker, Chrysler Corp., in 2007, and has been struggling with a falling demand for its luxury vehicles and a shrinking market for trucks. The company employed more than 270,000 people worldwide and built 2.1 million vehicles last year. It has since launched a cost-cutting programme to cope better with the financial crisis.
The company sold 25 per cent fewer cars in the first two months of this year compared to the same period in 2008, and it expects to record an operating loss for the first quarter. Daimler’s annual net profit in 2008 slumped by nearly two-thirds to 1.4 billion euros.
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