Division of Daimler: "Mercedes will be Mercedes again"

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It's a small revolution that is to take place in Stuttgart this year: The Daimler group is to be split into two parts.

While the truck and bus business is to be spun off into a separate company and listed on the stock exchange, the core business of the car name is getting a historic and symbolic name back: Mercedes Benz AG.

For several years now, Stuttgart had repeatedly toyed with the idea of ​​spinning off the truck business and going public, but so far the plans have been postponed again and again.

Now things should go fast: An extraordinary general meeting of the shareholders could decide in autumn, the first stock exchange listing for the truck division would then take place in 2021.

The majority of Daimler Truck AG is to be transferred in a so-called spin-off to the previous Daimler shareholders, who will then have papers from the truck business as well as shares in the future Mercedes Benz AG, which will produce the cars, in their depots.

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The group wants to bring the majority of the shares in Truck AG to the stock exchange.

The division for financial and mobility services will be split between the two listed companies.

"This is a historic moment for Daimler and the beginning of a profound restructuring of the company," said Daimler boss Ola Källenius.

Both companies could act more quickly independently of each other.

"All of this makes them much stronger and more competitive."

"Cars and trucks are like submarines and cruise liners"

Experts also consider the split to be useful.

“Mercedes will be Mercedes again,” said the head of the Center Automotive Research (CAR), Ferdinand Dudenhöffer, WELT.

With this step, Daimler is following the strategy that its competitors are also pursuing, so that both Volvo and Volkswagen have already separated their truck and car businesses.

In this way, management can concentrate on one task at a time.

"A car has as much in common with a truck as a submarine does with a cruise liner," said Dudenhöffer.

NordLB analyst Frank Schwope also thinks the step is correct, the divisions are becoming ever more distant anyway, and electromobility plays a much more important role in the passenger car business than in the case of trucks.

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The new truck company should be a candidate for the German leading index Dax, which is to be expanded to 40 members this year.

Daimler AG is later to be renamed Mercedes-Benz and thus adapted to the name of the core brand.

At the end of 2019, Daimler split into a holding company with three independent subsidiaries.

The goal of the costly restructuring was more flexibility in order to attract investors who only want to get involved in one business area but not in the entire group.

Some analysts have long been calling for the truck division, which is the world market leader for heavy trucks, to go public.

However, it was previously expected that only a minority share would go public.

The Daimler share shot up by seven percent to 63.50 euros.

Daimler's Siemens strategy

In 2019, Daimler Truck alone had sales of 40.2 billion euros with more than 100,000 employees, with brands from Mercedes-Benz to Freightliner to Fuso.

Added to this was 4.7 billion euros with buses.

The combined operating profit of both subsidiaries was around 2.8 billion euros.

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With the split, Daimler is following the model according to which Siemens had separated from its energy technology division Siemens Energy.

The Munich technology group gave the majority of Siemens Energy shares to its own shareholders and only kept 35.1 percent of the shares.

Both stocks had developed positively after Siemens Energy went public.

The turbine manufacturer is now considered a candidate for the Dax.

Volkswagen, on the other hand, had its truck and bus subsidiary Traton listed on the stock exchange in 2019.

The Wolfsburg-based car maker collected a good 1.5 billion euros, but retained a clear majority in Traton and thus still has to fully consolidate the holding for MAN and Scania in the balance sheet.

"At Volkswagen, too, you will now have to consider whether to go further with the spin-off at Traton," said NordLB analyst Schwope.