Directors of Daimler AG approved a plan to split the group into two businesses, setting up the Daimler Truck and Bus unit as a separate entity with majority holding by current Daimler AG shareholders. The automotive business will be renamed Mercedes-Benz, crediting the luxury brand that is its major asset.
"This is a historic moment for Daimler,” explained board chairman Ola Källenius. “It represents the start of a profound reshaping of the company. … 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."
Daimler Truck is a holding company for seven commercial vehicle and bus brands, including Freightliner, Fuso, Mercedes-Benz, Setra, Thomas Built Buses and Western Star. It has over 100,000 employees at 35 locations worldwide.
According to Daimler, truck division had revenues of €40.2 billion ($48.3 billion) in 2019, selling 488,521 vehicles worldwide. Published reports indicated the spin-off could be valued at about $35 billion, based on current market conditions, although its recent performance may not justify that figure. The Freightliner brand has posted impressive revenues, though the other brands have been less profitable.
While investors have lobbied for a long time to break up the company, believing that the automaking unit will command a higher valuation than it presently achieves, the spin-off requires the approval of the shareholders at an extraordinary general meeting of Daimler. No date has been announced for that vote.
The new Daimler Truck business will an independent management team and corporate directors.
"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," Källenius stated.