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Daimler: Continental Lessons

Interesting piece here on the takeover of Continental AG by Schaeffler.


Interesting because it offers some insight into what might happen to Daimler. If Daimler is as pessimistic as we believe it may be - and, if BMW's performance is anything to go by should be - in terms of cashflow from the car business over the next couple of years, then it's likely to need to sell something in order to shore up the books.

But, if it does, then the very barrier against a trade - as opposed to a financial buyer - namely the conglomerate structure - is lost. The likelihood of a predatory financial buyer at the moment would seem remote, but if there's one trade buyer such as Schaeffler kicking around, who is to argue that there isn't another? So, divesting the truck business would seem to leave Daimler more rather than less open to a hostile player - at least at the moment.

Of course, by extension, were Daimler to broaden its conglomerate structure - by, for example, taking on bits of KamAZ and doing deals with Beiqi Foton, then the whole thing might get just a little bit too diverse for your average trade buyer. On the other hand, for a trade buyer with deep pockets and no shortage of ambition, it could just make the deal irresistible.

 


 

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