Dubai buys stake in German carmaker DaimlerChrysler

DUBAI International Capital last week joined Kuwait as one of the major shareholders in DaimlerChrysler AG. The unit of state-owned Dubai Holding, bought a US$1 billion stake in the company, becoming the third-largest shareholder in the German-American auto manufacturer.

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By  Rhys Jones Published  February 6, 2005

DUBAI International Capital last week joined Kuwait as one of the major shareholders in DaimlerChrysler AG. The unit of state-owned Dubai Holding, bought a US$1 billion stake in the company, becoming the third-largest shareholder in the German-American auto manufacturer. The agreement, the result of a previous visit to Dubai by chief executive Juergen Schrempp, represents a long-term commitment to the company by the emirate. Dubai International Capital was set up last year to invest in international and Arab companies to help the emirate expand its own businesses. “This is a perfect time to acquire shares in DaimlerChrysler as the company begins to bear the fruits of its merger with Chrysler,” said Mohammed Al Gergawi, chief executive of Dubai Holding. Dubai becomes DaimlerChrysler’s third-biggest shareholder, with Deutsche Bank AG and Kuwait the two largest investors. Kuwait, the Middle East’s fifth-largest oil producer, is DaimlerChrysler’s second-biggest owner with 73.5 million shares, according to Bloomberg data. Abu Dhabi pursued a similar industrial development strategy late last year. In November, government-owned Mubadala bought a stake in European leasing firm Leaseplan with Volkswagen (VW). A month later, VW said it would build a truck assembly plant in Abu Dhabi. Walid Shihabi, an analyst at Dubai-based investment bank Shuaa Capital said the deal may lead to DaimlerChrysler investing in a Dubai-based manufacturing facility. “It might be in exchange for DaimlerChrysler establishing an industrial presence,” he said. “This may be similar to the deal in Abu Dhabi, where VW is going to create a production line,” Shihabi added. The Dubai shares equate to a near 2% stake.

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