Uh-oh. Daimler must be needing money really bad. Reuters has on their wire that Daimler is trying to sell their complete 5.34 percent share in Tata Motors for cheap. They are offering the package at a discount of 4 to 7 percent below the stock’s Monday close, and hope to raise $429 million.
It’s a good time to sell Tata. Their stock has risen 19 percent since Feb 26 when the company posted a consolidated net profit for the second straight quarter as sales from its Jaguar and Land Rover unit recovered.
But you must be in dire straits as a foreign carmaker if you liquidate your investment in one of the hottest players in one of the world’s most promising car markets just to raise some cash.
Car sales in India have surged in recent months and jumped by a third in February to a record as buyers rushed to beat a planned increase in taxes and tighter emission rules that will kick in in April.
So… Daimler finally ran out of the money they raided from Chrysler’s war chest?
I think it was the Chrylser that needed money more than Daimler. Hasn’t the typical Chrylser’s pattern been where it needs money then some company buys it out?
Chrysler was a faux dimond in the rough, Zarconia.
I’ve been harping on this for years. This a an extremely challenged company, both ethically and morally.
Apparently they are also extremely fiscally challenged as well. It’s fairly obvious that Daimler does not have the resources to survive on its own without raiding other companies for operating capital. One has to question how much money the mercedes benz division loses each year, and how they are cooking the books to hide it.
Wrong, Russell Chrysler had loads of money going into the merger with Daimler. (36 Billion in cash). They knew trouble in the auto industry was coming, and a bunch of (stupid) financiers convinced them (Robert Eaton) that a merger would save them. Had they listened to Robert Lutz at the time, Chrysler would have stayed independent and probably done well, instead of being stripped and flipped by Daimler.
Sorry to throw in some facts which disagree with your convictions Jimboy:
Normalised EBIT estimate for FY2010 by division (source: Credit Suisse)
Mercedes Car Group 6.4%
Commercial Vehicles 1.3%
Vans/ Buses/ Others 3.2%
Daimler Group 4.6%
Sure they made a loss last year and surprised the instituitional investors by not paying a divident this year, but this is fully gone over in the Investors Conference Call on 24 Feb – full transcript here (and of course, it’s these very professional investors who are trying to deeply understand what is going on in the accounts and have the opportunity to field any questions they like to the CEO and CFO).
http://www.123jump.com/market-update/Daimler-AG-Q4-Earnings-Call-Transcript/36739/reports/Daimler
The actual amount in Chrysler’s rainy day fund has been estimated between 8-12 billion. Most settle on the middle estimate of 10 billion. The idea was that the company would not starve for product development funds if the economy suffered a recession and new product would be ready when the recession ended. The money has never been accounted for.
Chrysler is not the only one who has been raided for cash. Freightliner, Fokker aviation, and probably others. That’s why one of the nicknames for this company is count Daimlercula.
Don’t worry about Robert Eaton, the former GM exec. He made out fine. To the tune of $50 million.
They already ran out of the 2.7 billion euros from the sale to Aabar-Abu Dhabi back in March of 2009? Horrible management to say the least!
Michael Schumacher must have asked for a raise.
I wouldn’t give them $429.00 for that thing.
They are not selling the package for cheap. 5-7% discount towards current share price is pretty normal for a package this large. If they tried to dump their stake on the stock market, the share price would tank much more severely…
Also, Daimler has net cash of roughly 7bn currently on the books. Yes, a few months ago they raised capital, but that was back when they faced the threat of having to bail out their own financing arm. They really don’t need the money at the moment.
Bertel, I would have expected a bit more thorough research from you:
There are 2 reasons Daimler is selling their stake:
1. Tata used to build trucks for Daimler, Daimler is now building their own production sites in India
2. Tata now owns Jaguar and is thus perceived by Daimler as a competitor.
I know this doesn’t make for a sensationalist headline, but it’s closer to the truth…