State-backed Aabar Investments now owns stake in the maker of Mercedes-Benz. Experts say the deal reflects Daimler's weak position.
DUBAI, FRANKFURT.
Shares in Daimler rose on Monday after an Abu Dhabi fund became its top shareholder, but analysts fear the deal may mean the German carmaker is having a tougher time than previously thought.
State-backed Aabar Investments is getting a 9.1% stake in Daimler in the $2.67 billion deal announced late on Sunday, helping bolster finances for the maker of Mercedes-Benz cars at a time of plunging global car and truck markets.
"Daimler's action might raise questions on management's perspective on 2009," analysts at Commerzbank, which rates the stock "add", wrote in a note to clients.
"However, in the current environment we believe the fact that Daimler has access to equity is a strength and we would buy into any potential weakness of the share price."
Daimler shares jumped by more than 8% but later pared gains to trade up 4.3%, outperforming the DJ Stoxx European car sector index, which was up 2.8%. Daimler has lagged the index by around 6% so far this year.
The surprise move underscores the financial muscle of energy exporters in the Gulf Arab region in a downturn that has left many blue-chip Western firms hungry for state aid.
Shares in Aabar climbed 2.3%.
Some analysts remained skeptical about the move, under which Aabar gets 96.4 million new shares at a price of 20.27 euros each -- a 5% discount to Friday's close of 21.34 and from which existing shareholders are excluded.
"The lack of premium and the exclusion of existing shareholders will likely increase concerns about Daimler's financial and strategic position," UBS analysts wrote, keeping its "sell" rating on the stock.
"The Daimler deal also highlights in our view the need for creative approaches as existing shareholders' appetite for recapitalization without structural change is likely limited."
A regular target of M&A speculation, Daimler is one of the few car giants in the world without a protective shareholder. German peer BMW, for instance, is controlled by the Quandt family, which holds a combined 46.6% stake.
"We are not surprised by the capital increase and indeed expect similar moves from all European (carmakers) unless the environment improves sharply and soon," Morgan Stanley said, maintaining an "overweight" rating on Daimler stock.
"This move shows that having a positive net auto cash position does not necessarily prevent the risk of equity dilution."
Kuwait diluted
The Gulf Arab state of Kuwait's stake in Daimler falls to 6.9% from 7.6% as a result of the deal that installs Aabar as Daimler's largest investor.
Formerly called Aabar Petroleum Investments Company PJSC and founded in 2005, the Abu Dhabi-based company explored oil and gas in southeast Asia before selling off in 2008 core units like Pearl Energy Limited and Dalma Energy LLC.
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