Daimler reaches deal to sell its stake to EADS for $2 billion

Article by Christian A., on December 10, 2012

Daimler CEO Dieter Zetsche was able to reach a deal to sell its stake in European Aeronautic, Defense & Space Co. With this move, Zetsche hits a milestone in focusing the company’s efforts to its automaking origins again. Daimler pursued an exit from EADS, a company that it helped to build over 10 years ago, with the 1.66 billion-euro ($2.15 billion) sale of half its holding.

The sale generates cash as the Mercedes-Benz brand of Daimler creates a new compact-car line and updates its flagship S-class sedan. With the departure of the Maybach superluxury brand and Fiat’s acquisition of Chrysler, Zetsche has become even more determined to achieve his goal of outdoing luxury-car leader BMW by the end of this decade.

Mercedes, which is currently ranked third in terms of sales, trails behind BMW and Audi. In fact, the gap from the top two brands has widened even further. Stefan Bratzel, director of the Center of Automotive Management at the University of Applied Sciences in Bergisch Gladbach, Germany, said that Zetsche is now under more pressure to attain his goals.

EADS, which is based in Toulouse, France, was intended to be a stand-alone manufacturer in 2000 when Airbus's German and state-owned French and Spanish partners merged their aerospace assets. Daimler's former Dasa unit was one of EADS’ founders.

The stake sale, which results from the main investors' deal to loosen up EADS's shareholder structure, relieves Daimler from becoming obligated to serve as Germany's voice at the firm. Eerik Budarz, a Frankfurt-based analyst with Silvia Quandt Research, considers it as a “good thing.” He explained that when EADS’ load is removed, it will lead to more time spent for other matters that are more relevant to its core operations.

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