Mercedes-Benz spin-off Daimler Truck begins marketing

Daimler’s auto and truck divisions reached an out-of-court divorce on Friday when Daimler Truck shares began trading separately on the F...


Daimler’s auto and truck divisions reached an out-of-court divorce on Friday when Daimler Truck shares began trading separately on the Frankfurt Stock Exchange.

The separation of luxury automaker Mercedes-Benz from Daimler Truck, owner of Freightliner in the United States, marked the end of an era not only for Daimler but also for the German economy.

The spin-off, announced in February, was the latest chapter in a transition that began in the 1990s, when Daimler was a sprawling conglomerate that also made passenger trains and planes. Along with other industrial empires like Siemens, Daimler was forced to shed excess baggage to stay competitive.

For car and truck manufacturers, the need to ditch heavy corporate structures has become even more urgent as they attempt to survive the transition to zero-emissions propulsion. One of the justifications for the spin-off is that it will allow Daimler Truck managers to make decisions more quickly.

Daimler Truck bets on hydrogen fuel cells for long-haul trucks, unlike competitors like Scania, which favor batteries. It is not yet clear which technology will prevail.

A few decades ago, many German companies operated on the principle that the bigger it was, the better. It might have made sense when capital was harder to come by, said Martin Daum, managing director of Daimler Truck, because the more profitable parts of a conglomerate could generate cash for distressed units.

“We had very inefficient capital markets overall,” Daum said in an interview. “It has supported the build-up of conglomerates.”

“Today, every business that has a compelling idea can raise funds,” he said.

Whether Daimler Truck has convincing ideas will now be put to the test. Shares opened at 28 euros (about $ 31.60) on Friday and rose 8.5%, valuing the company at around $ 27 billion.

The new company is the largest truck manufacturer in the United States through its Freightliner brand. Globally, Daimler Truck is also the world’s largest bus manufacturer. Its other brands include Mercedes-Benz trucks and buses sold primarily in Europe and Fuso trucks sold in Asia.

Daimler Truck and Mercedes-Benz luxury cars will remain closely linked. Mercedes’ parent company Daimler will retain a 35% stake in Daimler Truck. The remaining shares will be distributed to Daimler shareholders.

BNP Paribas, Citigroup and Goldman Sachs serve as listing agents for the spin-off.

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Newsrust - US Top News: Mercedes-Benz spin-off Daimler Truck begins marketing
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