Daimler CEO says trucks spinoff protects Mercedes car business from takeover

Daimler's top executive says shrinking the company through a spinoff of its industry-leading heavy trucks subsidiary should protect its core premium car business from a hostile takeover bid rather than endanger it.

"You are more vulnerable if you have intrinsic value that is not reflected in your stock than if you unlock that," CEO Ola Kallenius told reporters. "I don't believe Mercedes is a takeover candidate."

His comments came during a conference call shortly after the company on Wednesday revealed plans to divest a clear majority of the equity in Daimler Trucks & Buses and list those shares on the Frankfurt stock exchange this year.

A number of financial analysts have suggested Daimler make this move because equity markets give a higher value to so-called "pure play" companies than conglomerates.

Daimler is one of the few major vehicle manufacturers that doesn't have a family dynasty as a long-term controlling stakeholder to provide stability.

This puts greater pressure on Daimler's management to act in the interests of investors looking to capitalize on short-term gains rather than customers.

One of the considerations that led former Daimler CEO Jürgen Schrempp to merge Daimler with Chrysler in the 1990s was to create a global powerhouse that could no longer be a target for hostile bidders.

This included private equity firms that finance takeovers with debt piled onto their target's balance sheet, only to then break up the company, selling off its assets to rivals.

Asked if he had any assurances from his major stakeholders that they might be willing to protect the company from an unsolicited bid, Kallenius said he had only just begun reaching out following the regulatory announcement, given restrictions on insider information.

Kallenius, who took over in May 2019 along with new finance chief Harald Wilhelm, still needs to speak to Daimler key Chinese shareholders, Geely Auto founder Li Shufu, and BAIC Group, to gauge their reactions.

Together they own about 15 percent of Daimler's equity, making them two of the three largest shareholders in the company along with the Gulf state of Kuwait.