Report: Daimler and Renault could swap symbolic stakes

Article by Christian A., on August 29, 2010

The decision to be made jointly by Daimler AG and Renault SA on a wide-ranging strategic partnership is reported to be nearing, according to the Financial Times.

Insider sources said that the companies are expected to announce a decision in April about a partnership that would include a swap of small equity stakes.

A source said that the "symbolic" stakes could be about 3%, which is only a little above the level at which it's required that they are disclosed.

It has been known that both companies were engaging in talks on a possible cooperation but ever since, there have been no confirmations from either side if the deal would include swapping equity stakes.

Daimler wants to find a partner to produce small cars; this is a segment that it is having difficulty turning up a profit for due to the small scale and high variable costs. Last December, Daimler and Renault mentioned having joint projects but they declined to provide further details.

It is believed that Daimler and Renault could potentially design a small-car platform to be based on Renault's Twingo and will be used by Daimler to underpin a four-seater model for its Smart microcar brand. It should be noted that Renault already has Nissan Motor Co. as an alliance partner.

The Nikkei business daily said that Nissan could supply electric cars and batteries to Daimler and source large engines from Daimler.

A Renault spokeswoman would only say that it is in talks with Daimler as well as with other carmakers; she had no other comment.

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