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Daimler Investor Aabar Shifts to Indirect Voting Holding

Aabar Shifts to Indirect Daimler Stake as Earnings Seen Falling
Daimler stock is trading about 85 percent higher than when Aabar acquired a 9.04 percent stake in the carmaker in March 2009, when the fund bought the stock at a 5 percent discount. Photographer: Guenter Schiffmann/Bloomberg

Aabar Investments PJSC sold its remaining voting stake in Daimler AG two weeks after the world’s third-biggest luxury-car manufacturer predicted the European auto-market contraction will hurt profit at its main brand.

The Abu Dhabi sovereign-wealth fund disposed of its 3.1 percent holding on Oct. 5, Florian Martens, a spokesman at Stuttgart, Germany-based Daimler, said by phone today. Aabar retains 12.75 percent indirect voting rights through financial instruments, he said.

Daimler stock is trading about 85 percent higher than when Aabar acquired a 9.04 percent stake in the carmaker in March 2009, when the fund bought new shares at a 5 percent discount. Daimler Chief Executive Officer Dieter Zetsche said last month that earnings at the Mercedes-Benz Cars division will fall this year, rather than matching figures from 2011, because of “deteriorating” European market conditions.

“Aabar bought the shares relatively cheaply, so in terms of portfolio management they’ve made almost 100 percent profit,” said Juergen Pieper, a Frankfurt-based Bankhaus Metzler analyst who recommends selling Daimler stock. “It says something about the opinion of one of the biggest and most important market players.”

Stock Gains

Daimler rose as much as 1.5 percent to 38.72 euros and was trading 0.6 percent higher at 10:55 a.m. in Frankfurt. The stock has gained 13 percent this year, the second-worst performance on the Bloomberg Europe Autos Index. Aabar originally bought its stake at 20.27 euros a share in a transaction valued at 1.95 billion euros ($2.52 billion).

The German manufacturer “respects” the shift in shareholdings, and nothing else has changed in its ties with Aabar, Martens said. Aabar didn’t immediately respond to requests for comments during the weekly Friday day off in the Persian Gulf.

Aabar lent about half its holdings a year ago to an unidentified recipient, saying at the time that it remained “fully committed” to the carmaker.

The fund’s decision to retain indirect voting rights indicates a lingering “economic interest,” David Arnold, an auto-industry specialist with Credit Suisse in London, said today. “I don’t think an actual sale has happened here. It’s a transfer of collateral.” The longer-term question is “where does Daimler see the benefit from its cost-cutting program and the uplift from Mercedes’s model momentum over the next two to three years?”

BMW’s Lead

Global car-sales growth at the Mercedes-Benz brand is lagging behind gains at luxury-market leader Bayerische Motoren Werke AG and second-ranked Audi AG. Deliveries posted by Mercedes rose 2 percent in September from a year earlier, while BMW’s and Audi’s sales increased by about 14 percent each. Zetsche set a goal in September 2011 for Mercedes to retake its role as the best-selling luxury-car brand by 2020.

Mercedes began selling a new version of its A-Class hatchback, the brand’s smallest car, in September. The model competes with BMW’s 1-Series and Audi’s A3. The A-Class is among five models that Daimler plans to introduce in coming years.

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