These days, carmakers need cash any way they can get it. Increasingly, that means begging for handouts from cash-strapped governments. German authorities should therefore feel relieved about Daimler’s announcement on Sunday of a cash injection from Aabar Investments, an Abu Dhabi-based investment fund.
In return for €2bn in cash, the maker of Mercedes luxury cars will hand the part state-owned company new shares worth 9.1 per cent of Daimler. That will dilute existing shareholders. The Kuwait Investment Authority, currently the carmaker’s biggest shareholder at 7.6 per cent, will see its stake fall to 6.9 per cent, for example. Not pleasant, but it could be worse. At €20.27 a share, Aabar’s stake was priced at only a slight discount to the company’s €21.34 closing price on Friday. Had Daimler eventually been forced into a rights issue instead, the discount might have been far steeper.
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