Nov. 18 (Bloomberg) -- Daimler AG will sign a final agreement to buy a 12 percent stake in Beijing Automotive Group Co.’s passenger-car unit tomorrow, securing a stake in the Chinese automaker ahead of a planned initial public offering.
The Stuttgart, Germany-based automaker will sign the deal at the Beijing local government, Beijing Automotive Chairman Xu Heyi said today in the Chinese capital. Hendrik Sackmann, a Daimler spokesman, said “we’re progressing well” and that the automaker will communicate more when the contracts are signed.
Daimler previously said that as part of the transaction, the automaker will receive two seats on the board of BAIC Motor Co. BAIC will also increase ownership in a production joint venture to 51 percent from the current 50 percent. The venture began production at the first Mercedes-Benz passenger car-engine plant outside of Germany in Beijing today.
Beijing Automotive may “soon” invest in Daimler, depending on the market situation and how much funds it has at its disposal, Xu said, without being more specific.
The agreement paves the way for BAIC to pursue an IPO. BAIC has hired investment banks including Goldman Sachs Group Inc. and UBS AG for the share sale, probably in Hong Kong, Xu said.
Mercedes’s growth in China, the world’s largest automotive market, had been hampered by a distribution structure that split deliveries of locally made and imported vehicles. The carmaker combined the sales units last December. In August, Daimler said it will invest 2 billion euros ($2.7 billion) to double local production to more than 200,000 vehicles.
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