Daimler Buys 12% Stake in Chinese Automaker BAIC

DaimlerDaimlerGermany, 1889 > present12 models
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has bought a 12% stake in Chinese automaker Beijing Automotive GroupBeijingChina, 1952 > present1 model
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(BAIC), which makes it the first foreign automaker to buy a stake in a Chinese automaker. The deal will also give Daimler two seats on BAIC's Board of Directors. Because of the long approval process by Chinese authorities, the deal is not expected to be completed until the end of 2013 or early 2014. 

Daimler will pay for the investment by issuing stock worth 12% of BAIC.

Daimler and BAIC already has joint venture in China with BAIC. As part of the agreement BAIC will increase its stake in the production joint venture to 51%. However, Daimler will increase its stake in the sales portion of the joint venture to 51%. 

“Following our technical cooperation with BAIC Motor and the setup of our integrated sales company, we are now taking the next step in deepening our relationship even further. Our investment is a strong sign of the increased level of trust and cooperation between our two companies and clearly emphasizes the long-term commitment to a joint successful future of our two companies," said Daimler Chairman Dr. Dieter Zetsche.

BAIC Chairman Xu Heyi says that it will use the money to invest in technology and accelerate the development of new cars. 

Daimler sees the deal as an opportunity to be part of the growing Chinese auto market. 

BAIC sold 1.5 million cars in 2011. Mercedes has had a partnership with the company since 2006 for its cars and since 2012 for its heavy trucks. BAIC builds the E-ClassMercedes-Benz E-Class Gen.5Germany, 2009 > present345 versions
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, C-ClassMercedes-Benz C-Class Gen.4Germany, 2007 > 2013188 versions
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and GLK-ClassMercedes-Benz GLK-ClassGermany, 2008 > present29 versions
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for Mercedes at its factories.