DaimlerChrysler Dumps Mitsubishi

DaimlerChrysler on Friday drew curtains on its relationship with Japanese car maker Mitsubishi Motor, selling its remaining 12.4 percent stake in the company to Goldman Sachs for an undisclosed price.

With Jürgen Schrempp’s grand plan to create a global car company, Daimler Chrysler once had 37 percent of the Japanese Car company, and was the fourth largest share holder. Jürgen Schrempp will be succeeded by Dieter Zetshe, the current head of Mercedes who will take control of Daimler in January 2006.

U.S. Investment bank Goldman Sachs Group Inc. now becomes Mitsubishi Motors’ largest shareholder with a 13.4 percent stake.

Daimler invested a total of €2.5bn ($2.9bn) in MMC, starting in 2000, to take a 37 per cent stake. But it was forced to write down most of the value of its stake as it proved unable to turn round MMC. Last year, Daimler refused to bail out the Japanese company, and its stake has gradually dwindled to 12.42 per cent.

Daimler said yesterday it had made an investment gain of €500m on the reduced price of MMC in its books. People familiar with the matter said the sale of the stake was completed in several hours at a discount to the current share price but with strong international demand.

DaimlerChrysler’s sale of its last Mitsubishi shares is the latest in a series of steps taken by the company to rid itself of some of its holdings and concentrate primarily on Chrysler and Mercedes, which is in the midst of its own turnaround plan.

Last year, DaimlerChrysler sold a small stake in Hyundai, the Korean auto company, and it is looking for a buy for MTU, a diesel engine maker in Fredrichshafen, German.

DaimlerChrysler plans to cut 8,500 jobs at Mercedes, in a restructuring that will cost the company $1.1 billion, so the proceeds of the Mitsubishi sale presumably could help offset that cost.