Yes, that isn’t a misprint, Daimler will be renamed Mercedes-Benz as the result of a massive corporate shift in strategy. In a move designed to focus on a zero-emissions, software-driven future, Daimler’s Supervisory board and Board of Management agreed to evaluate plans for a separate listing of Daimler Truck. But why?
“Mercedes-Benz Cars & Vans and Daimler Trucks & Buses are different businesses with specific customer groups, technology paths and capital needs,” said Ola Källenius, Chairman of the Board of Management of Daimler and Mercedes-Benz. “Both companies operate in industries that are facing major technological and structural changes.”
Gallery: Daimler Waymo Autonomous Semi Trucks
Business semantics aside, the move allows for further development of environmentally friendly tech for trucks and buses – yes, this also includes cars. For the uninitiated, Daimler Truck has already defined its visions for the future with substantial research in battery-electric, fuel-cell trucks, and even autonomous driving. The mention of autonomy will likely trigger purists, but we’ve already seen that the technology is getting more and more advanced
Regardless, this move makes quite a lot of sense because rather unsurprisingly, each respective company knows best how to serve its customer base. We can already see this with Daimler Truck, as the industry giant already stands as the world’s largest truck and bus producer in Europe, North America, Asia, and many other areas of planet earth.
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“We are convinced that independent management and governance will allow them to operate even faster, invest more ambitiously, target growth and cooperation, and thus be significantly more agile and competitive,” said Källenius.
For everything to materialise, a final decision must be made via a Daimler shareholder meeting planned to take place in Q3 of 2021. Until then, the German auto group will keep doing what it does best.
Stuttgart (Germany) - Daimler plans a fundamental change in its structure, designed to unlock the full potential of its businesses in a zero-emissions, software-driven future. The Supervisory Board and the Board of Management of Daimler today agreed to evaluate a spin-off of its Truck and Bus business and begin preparations for a separate listing of Daimler Truck. It is intended that a significant majority stake in Daimler Truck will be distributed to Daimler shareholders. The Daimler Truck business will have fully independent management, stand-alone corporate governance including an independent Chairman of the Supervisory Board, and is targeted to qualify as a DAX company. The transaction and the listing of Daimler Truck on the Frankfurt stock exchange is expected to be complete before year-end 2021. In addition, it is also Daimler’s intention to rename itself as Mercedes-Benz at the appropriate time.
Simplification of Daimler structure into two strong and independent companies
“This is a historic moment for Daimler. It represents the start of a profound reshaping of the company. Mercedes-Benz Cars & Vans and Daimler Trucks & Buses are different businesses with specific customer groups, technology paths and capital needs. Mercedes-Benz is the world’s most valuable luxury car brand, offering the most desirable cars to discerning customers. Daimler Truck supplies industry leading transportation solutions and services to customers. Both companies operate in industries that are facing major technological and structural changes. Given this context, we believe they will be able to operate most effectively as independent entities, equipped with strong net liquidity and free from the constraints of a conglomerate structure,” said Ola Källenius, Chairman of the Board of Management of Daimler and Mercedes-Benz.
As part of a more focused corporate structure, both Mercedes-Benz and Daimler Truck will also be supported by dedicated captive financial and mobility service entities, driving sales with tailor-made financing, leasing and mobility solutions, increasing retention and building customer loyalty. In this process, the company plans to assign resources and teams from today’s Daimler Mobility to both Mercedes-Benz and Daimler Truck.
“We have confidence in the financial and operational strength of our two vehicle divisions. And we are convinced that independent management and governance will allow them to operate even faster, invest more ambitiously, target growth and cooperation, and thus be significantly more agile and competitive,” added Källenius.
Daimler Truck to target growth and accelerate new technologies
Daimler Truck intends to generate value for its shareholders by accelerating the execution of its strategic plans, raising its profitability and driving forward with its development of emissions-free technologies for trucks and buses.
“This is a pivotal moment for Daimler Truck. With independence comes greater opportunity, greater visibility and transparency. We will grow further and continue our leadership in alternative powertrains and automation. We have already defined the future of our business with battery-electric and fuel-cell trucks, as well as strong positions in autonomous driving. With targeted partnerships we will accelerate the development of key technologies to bring best-in-class products to our customers rapidly,” said Martin Daum, Member of the Board of Management of Daimler and Chairman of the Board of Management of Daimler Truck.
“Daimler Truck already has a solid financial basis, and our business model is robust. We will continue to work on our cash flow management and we know how to deal with industry market cycles – we have proven that again in the significant COVID-related global market reduction. We have clear strategies to raise our financial performance and accelerate our execution. We will use our strong and well-known global brands, our scale and our exceptional technology to deliver industry-leading returns,” Daum added.
Daimler Truck is the world’s largest Truck and Bus producer, with industry leading positions in Europe, North America and Asia, and with more than 35 main locations around the globe. With more than 100,000 employees, it unites seven brands under one roof: BharatBenz, Freightliner, Fuso, Mercedes-Benz, Setra, Thomas Built Buses and Western Star. In 2019, a total of around half a million trucks and buses were delivered to customers. Revenue in 2019 for the individual divisions were €40.2 billion for Daimler Trucks and €4.7 billion for Daimler Buses. EBIT amounted to €2.5 billion for Daimler Trucks and €283 million for Daimler Buses.
Important step for customers, shareholders and employees
Manfred Bischoff, Chairman of the Supervisory Board of Daimler, sees the planned market listing as an important step to create value: „Mercedes-Benz and Daimler Truck enter this transformation with significant strengths and we are convinced they will emerge even stronger as independent companies, serving their respective customers. With their different return profiles and capital needs, the rationale for two independent entities is evident. We are convinced that the capital markets will appreciate the opportunity to invest in more clearly focused, pure-play businesses. The final decision on the spin-off has to be made by an extra-ordinary shareholder meeting of Daimler, which is planned to take place in Q3 2021.“
Michael Brecht, Chairman of the Daimler’s General Works Council, endorsed the plans: “The transformation of our industry is moving ahead quickly. In order for us to keep pace, we need to invest in innovations boldly and more quickly. To this end, we will set up an innovation fund with a volume of €1.5 billion for Daimler Truck in addition to our current financial plans. This will enable us to invest in new products and technologies, and we will play an active role by contributing our ideas. This provides additional support for our locations and helps to secure employment. In addition, collective bargaining deals such as our labor agreements will continue to apply until the end of the decade. The planned independence will bring Mercedes-Benz and Daimler Truck many advantages, and we will continue to do everything in our power to uphold the interests of our colleagues. We have the unique opportunity to proactively and sustainably shape our commercial vehicle sites - from production to the service business - in order to help write the next chapter of the Daimler Truck success story.”
Further details to be presented at extra-ordinary shareholder meeting Q3 2021
The intended structure of the transaction would involve Daimler transferring the majority of Daimler Truck to its shareholders on a pro rata basis in accordance with existing shareholdings, but it intends to retain a minority shareholding. Representation of Daimler in the Daimler Truck Supervisory Board will be in line with the intended deconsolidation.
This marks the beginning of the process to finalize the planned transaction. Therefore, it will not be possible to provide full details on various financial and technical subjects, including the exact share to be listed and the allocation ratio, until a later date.
All further details of the intended spin-off would be presented to the shareholders at an extra-ordinary shareholder meeting in Q3 2021, in order to obtain their mandatory approval to the plan.