Cash-Rich Dubai Takes $1 Billion Stake in DaimlerChrysler
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The government of the Persian Gulf emirate of Dubai has bought a $1 billion stake in DaimlerChrysler AG, making Dubai the third biggest shareholder in the world’s largest luxury automobile maker, it announced yesterday.
Dubai – one of the seven emirates that constitute the United Arab Emirates – bought its stake in the German-American automaker through Dubai International Capital, a unit of the government’s wholly owned Dubai Holding.
Dubai, the trade and tourism hub of the Gulf region, created the holding company late last year to oversee the emirate’s investments.
The firm is reportedly mainly focused on real estate and tourism ventures in Dubai, but it also set up an international private equity arm, Dubai International Capital, for foreign acquisitions.
“This is a perfect time to acquire shares in DaimlerChrysler as the company begins to bear the fruits of its merger with Chrysler,” said the chief executive of Dubai Holding, Mohammed Al Gergawi, in a statement.
Mr. Al Gergawi also expressed “full faith” in DaimlerChrysler’s current management “under the able leadership of Professor Jurgen E. Schremp, chairman of the board.”
Deutsche Bank AG, Europe’s third-largest bank, is the company’s largest investor, holding 235 million shares. Kuwait, the Middle East’s fifth-largest oil producer, ranks second, with 73.5 million, according to Bloomberg News.
DaimlerChrysler confirmed the purchase and welcomed Dubai as a long-term investor, according to reports.
DaimlerChrysler’s American sales of its Chrysler brand have been offsetting declines in sales of its Mercedes brand overseas.
The company reported a third-quarter profit last year as earnings growth at the Chrysler division offset a decline at the Mercedes Car Group.Net income was 951 million euros, compared with a loss of 1.65 billion euros a year earlier.
A booming global truck market helped the company boost commercial vehicle sales 42% in 2004 to 712,200 units, the company announced last week. At Friday’s closing share price of $45.02, Dubai now holds 2.2% of the company.
