Abu Dhabi Becomes Biggest Daimler Shareholder

Two Arab governments, the Emirate of Abu Dhabi and the State of Kuwait, are now the biggest shareholders of Germany’s Daimler, best known as the maker of Mercedes-Benz.

Aabar, an investment company headquartered in Abu Dhabi, this week announced the purchase of shares representing 9.1 percent of Daimler, for about $2.7 billion. Aabar’s largest stakeholder is the International Petroleum Investment Company, which in turn is wholly owned by the Government of the Emirate of Abu Dhabi.

Following Abu Dhabi’s investment, Kuwait owns about 6.9 percent of Daimler through the Kuwait Investment Authority, as agent for the Government of the State of Kuwait. Kuwait has owned shares of Daimler since 1974, following an earlier spike in oil prices. As of December 31, 2008, Kuwait’s holding represented 7.6 percent of Daimler, but Abu Dhabi’s investment diluted the shares of existing investors.

“We are delighted to welcome Aabar as a new major shareholder that is supportive of our corporate strategy. We look forward to working together to pursue joint strategic initiatives,” said Dieter Zetsche, Daimler chairman.

Based on his experience with the former DaimlerChrysler, Zetsche has probably had his fill of major shareholders who didn’t support the company’s corporate strategy, like Kirk Kerkorian, Chrysler’s former leading shareholder. Kerkorian twice tried to take over Chrysler, and opposed the DaimlerChrysler merger after the fact.

In contrast, Aabar is expected to work with Daimler to boost existing initiatives, like the development of electric vehicles and innovative, lightweight materials to be used in automotive manufacturing. Daimler will also establish a training center in Abu Dhabi, for positions in the automotive industry. Besides the potential financial returns, the electric vehicle initiative could provide oil-producing Abu Dhabi with some positive public relations.

“Daimler is an iconic brand and a financially strong company with a reputation for excellence worldwide,” said Aabar Chairman Khadem Al Qubaisi. “We believe that our future cooperation will be beneficial for Aabar and create social and economic benefits for Abu Dhabi and the United Arab Emirates,” he said in a written statement.